Interview with Fair Isaac scoring expert

[Anonymous]

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@Barry wrote:

This has always been a common misunderstanding, not just among consumers but also among lenders, mortgage brokers, etc. -- equating number of accounts on file with the number of "open" accounts on file. To be clear, while the FICO scoring formula considers the number of accounts on file and the mix of different types of accounts, it does not specifically look at the number of open vs. closed accounts.

In fact, FICO scores and the myFICO site have never actually had any negative factors or explanations that refer to "open" accounts as having a negative effect, but people seem have taken "number of accounts" to automatically mean "number of open accounts" -- a misconception we're constantly having to clarify.

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Whoa. I didn't know that, thanks for the tip.

I'm guessing that's part of why I'm being hit, though:

Accounts 57
Accounts with balances 22
Accounts opened in past year 9

[Anonymous]

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@Anonymous wrote:
Whoa. I didn't know that, thanks for the tip.

I'm guessing that's part of why I'm being hit, though:

Accounts 57
Accounts with balances 22
Accounts opened in past year 9

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Wow! 57 accounts. Thats hard work. May I ask what your highest score was or is?

[Anonymous]

Wow! 57 accounts. Thats hard work. May I ask what your highest score was or is?

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I've hit 650s-670s, but my current scores are 620s-660s.

A lot of them are closed student loan tradelines.

[Anonymous]

closed student loans fill up half of my reports.

[Anonymous]

OK, bone to pick.

In the article, Craig Watts reiterated what we've heard before. Don't close cards unless they're costing you money and closing cards won't help you.

However, I stumbled upon this error code.

"Too many bank/national revolving accounts".

It would seem that one can get too many credit cards.

[Tuscani]

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Noah_Bodie wrote:

OK, bone to pick.

In the article, Craig Watts reiterated what we've heard before. Don't close cards unless they're costing you money and closing cards won't help you.

However, I stumbled upon this error code.

"Too many bank/national revolving accounts".

It would seem that one can get too many credit cards.

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I suspect the error code you received was from a creditor, and not MyFICO right?

The FICO scoring formula considers the number of accounts on file and the mix of different types of accounts, it does not specifically look at the number of open vs. closed accounts.
 
In fact, FICO scores and the myFICO site have never actually had any negative factors or explanations that refer to "open" accounts as having a negative effect, but people seem have taken "number of accounts" to automatically mean "number of open accounts".

[Anonymous]

Tuscani wrote:

I suspect the error code you received was from a creditor, and not MyFICO right?

The FICO scoring formula considers the number of accounts on file and the mix of different types of accounts, it does not specifically look at the number of open vs. closed accounts.
 
In fact, FICO scores and the myFICO site have never actually had any negative factors or explanations that refer to "open" accounts as having a negative effect, but people seem have taken "number of accounts" to automatically mean "number of open accounts".

Actually, it wasn't an error code I got. I was just looking at a list of error codes online, mostly the "too many" codes. This one is Classic Code 04.

The "too many" codes I saw were:

Too many accounts recently opened
Too many accounts with balances
Too many bank/national revolving accounts
Too many consumer finance company accounts
Too many inquiries last 12 months

[smallfry]

I noticed that when my total number of accounts (both open and closed) went over 30 on my Experian report I got red flagged for it.

[smallfry]

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@Anonymous wrote:

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@Barry wrote:

This has always been a common misunderstanding, not just among consumers but also among lenders, mortgage brokers, etc. -- equating number of accounts on file with the number of "open" accounts on file. To be clear, while the FICO scoring formula considers the number of accounts on file and the mix of different types of accounts, it does not specifically look at the number of open vs. closed accounts.

In fact, FICO scores and the myFICO site have never actually had any negative factors or explanations that refer to "open" accounts as having a negative effect, but people seem have taken "number of accounts" to automatically mean "number of open accounts" -- a misconception we're constantly having to clarify.

---

Whoa. I didn't know that, thanks for the tip.

I'm guessing that's part of why I'm being hit, though:

Accounts 57
Accounts with balances 22
Accounts opened in past year 9

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22 accounts with balances? Might want to bring that number down by one or twenty.

[haulingthescoreup]

troy, I think I read elsewhere that the slideshow needs updating (it says 1999.) But if true, I've got some questions about slide 8.

-How does it know whether I own or rent? That's not on my reports, as best as I can tell. A lender would know, but not FICO.

-How does the FICO system know about bank holdings or debt ratio? That's cash info, not credit info, and again not on the reports.

-Does it really weight for occupation and length on job? One of my reports shows me as still being a housewife, but that's long past. Another has no job info at all, and only the third has my correct job.

I'd love to believe the slide show, because at least it's something! Thanks for posting; gotta go look at the other one now.

edit: and now I see that many of the same questions are on the commentary (the second link). Also, the score range referred to is obviously not the 2xx - 850 range that we all know and love. Maybe they take that raw score --up to 240, wasn't it? --and use a multiplier *that accounts for current bucket assignment!!!* (I knew I could get re-bucketing in somewhere! )

Message Edited by haulingthescoreup on 10-24-2007 03:32 PM