Kickin' the Bucket....theory around.

[Anonymous]

Hi again all!

I recently had my only baddie fall off of my EQ report on May 2nd. The next day I got a Scorewatch alert informing me that my score had dropped from 605 to 549! Now, I realize that having my only derog account aging off put me into a new bucket for scoring purposes, and I'm fine with the new bucket and score drop because I knew it would probably occur. The reason for this post is I'm trying to understand how the score drop is relative to the "updated items" that is being shown now as affecting my score.

Prior to the baddie dropping off, my EQ score was as high as 638 with only 9 months of AAOA back in November of '08. The score drop from 638 to 605 was driven largely by an increase in utilization on my 3 CC's as part of some experimentation I am doing for utilization purposes. The score drop from 638 to 605 occured in December '08 due to that being the month that the utilization increase hit my EQ report.

Since December of '08 the only change to my EQ report has been a refinance of a co-signed motorcycle loan to get it into my name only(NFCU Rocks!) in Feb. of '09. It hit my EQ report in March like clockwork at full loan value of just over 8K with no effect on my score in march or april!

When the baddie dropped off on May 2nd, my utilization on my CC's was the same as it was in Dec. of '08. The only other differences were the addition of the new NFCU loan in March, and 2 inquiries that hit their 12 month anniversary in April.

Prior to the baddie aging off; the negative factors affecting my score(on my Feb 4th EQ report) were listed as follows:

1. Collection

2. High Credit Usage

3. Short Account History

4. Seeking Credit

Positive factors affecting my score: No Missed Payments

After the collection aged off on May 2nd, my May 3rd EQ report now shows this as negative factors affecting my score:

1. Short Account History

2. High Credit Usage

3. Seeking Credit

4. Consumer Finance account

Positive factors affecting my score: None!

It seems with the new bucket that my perfect payment history isnt even considered, and my short credit history is now weighed more heavily than my high utilization was prior to the baddie aging off. So this tells me that for someone with less than 2 years of AAOA, their credit score will take a nose dive as mine did when your only baddie drops, placing you into the no-derog bucket. I also find that prior to the collection aging off, that the lack of mention of the "consumer finance account" seems to indicate that the FICO formula considers it less of an evil than inquiries, which tells me that the hit for CFL's is just a couple of points, if that.

But still, 55 points is a heck of a drop based on the "new" list of negative factors affecting my score. I'm now guessing that hitting my 2 year birthday with my oldest account will most likely net me my biggest score jump(aside from a reduction in utilization), with a slight increase when my AAOA hits the one year mark possibly.

A May 30th Scorewatch alert indicated my score went from 549 to 559 with no alert events being triggered. I'm guessing this was due to inquiries aging off, or the new NFCU loan updated with a reduced balance due to 2 payments being made.

This is all speculation based on what I've read here on these forums however, but I'm hoping for some feedback and input based on others experience with this non-derog re-bucketing. I'd really like to hear some speculation on what percentage of my 55 point drop was due to account age, and what percentage is due to utilization. It would seem that the FICO algorithm is VASTLY different for someone in the "non-derog" bucket, than it is for someone with a single derog.

[haulingthescoreup]

That is a heckuva drop, and I'm sure that you've already compared the reports with a yellow highlighter to make sure that there isn't another change you didn't see.

But the difference is that you made a dramatic bucket change. You went from a serious derog bucket (the collection) to a squeaky clean bucket. Squeaky clean people (whom I hope to one day join) typically have much lower util, longer history, etc etc than you have. So you looked pretty darn good compared to other folks with collections, but now that you've been "promoted", you're looking a bit shabby, so to speak. (And please understand that I'm speaking lightly, and it's your reports and not you.)

True: in your new bucket, your now-perfect payment history isn't considered, because that's what got you in this bucket in the first place. No extra brownie points.

When you're in a clean bucket, revolving util is HUGE. Seriously, seriously huge. You'd be hurt even if you were in a longer history bucket. And of course, the great thing about util is that if you have money available to pay down/ off your balances, you can get a great score jump (without negatives) in as long as it takes the new balances to update and appear on your reports.

So nothing you can do about age, other than stop apping for at least a year, same on the "seeking credit" thing, and don't worry about the consumer finance account ding. I've decided that it's good to see that as your last derog. It means that the scoring formula has run out of real things to criticize.

Get that util down, cool your jets, and you're going to look great in 2010!

[llecs]

That is a big drop, but congrats on the rebucketing. I lost 17 pts when my last late impacting my score (a 90) was removed due to CRTP. I pulled my scores the day before and the day after. I entered into this new buxket with approx 70% in util and have seen large gains as I paid it down of the past few months.

[Anonymous]

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haulingthescoreup wrote:

When you're in a clean bucket, revolving util is HUGE. Seriously, seriously huge. You'd be hurt even if you were in a longer history bucket. And of course, the great thing about util is that if you have money available to pay down/ off your balances, you can get a great score jump (without negatives) in as long as it takes the new balances to update and appear on your reports.

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Yes, I know it is huge, but what doesnt make sense here is that when my score was at 605, my utilization percentage was the -same- as it is now. If the negative items for the May 3rd report holds true to what is stated, then account age is weighted more heavily in the non-derog bucket than utilization is when a derog is present. Also, if the FICO formula holds true to bucket status, then this means that the reinsertion of an "old" collection, similar in age to the one that just aged off, should have the effect of actually raising my score by virtue of going -back- into the derog bucket. That just seems a bit odd that it could happen.

[haulingthescoreup]

Strange, but true. And good point about the age hurting more than the util. You can see that in the order of your new negatives. I agree that the combination of oldest history = 2 years and AAoA = 1 year will move you along, probably into a new bucket, lol.

There are in fact multiple "clean" buckets. I'm guessing you're in the short-but-clean bucket.

I agree that it's odd that you're in worse shape now, but it won't last. It's sort of like your teachers thinking that you're far ahead of classmates in your current class, so they skip you a grade, and suddenly knowing the multiplication tables isn't enough; you have to suddenly be able to do long division, too. Once you scramble and learn division (get your util down), you'll compare better to your new classmates.

And again, lenders look at more than scores; they look at the underlying credit report. So it's entirely possible that a lender would be happier to see your current score with an immaculate report than they would to see a higher score with a "dirty" history.

Once you're able to catch up on the util, you'll be stunned at how quickly your scores will move.

[RobertEG]

If what dropped off was a CA account at 7 1/2 years from DOFD, and that was your only major derog. you would most probably then be considered to now have a clean, vs. dirty, credit, file, and have be placed into a totally new FICO scoring algorithm that now compares only with clean file people.

That shifts all the weighting for categories, such as % util.

Droppng of a CA has absolutely no affect on lenght of credit or AAoA.  You dont have an account with a CA, only with an OC.  CA "accounts" appear on your CR, but that is an account between the CA and the CRA, and not with you.

The score change you will see is based primarily on the deletion of a major derog from your CR, and should not affect your  AAoA or % util, only its possible weighting in your new, clean bucket.

[Anonymous]

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@RobertEG wrote:

If what dropped off was a CA account at 7 1/2 years from DOFD, and that was your only major derog. you would most probably then be considered to now have a clean, vs. dirty, credit, file, and have be placed into a totally new FICO scoring algorithm that now compares only with clean file people.

That shifts all the weighting for categories, such as % util.

Droppng of a CA has absolutely no affect on lenght of credit or AAoA.  You dont have an account with a CA, only with an OC.  CA "accounts" appear on your CR, but that is an account between the CA and the CRA, and not with you.

The score change you will see is based primarily on the deletion of a major derog from your CR, and should not affect your  AAoA or % util, only its possible weighting in your new, clean bucket.

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Understood, hence the reason for this post. My CC utilization and the AAOA were the same when my score was a 605 -with- the derog account showing on my EQ CR. According to the score simulator that I ran a few months back, even with the derog still on my EQ report, my score with just 6 more months of good payment history would have been in the 680-710 range if I would have gotten my utilization below 9%. But now, in this new bucket, according to the score simulator, even if I paid my utilization to below 9%, the best I could hope for is a 625-650 over the next six months. Even if I paid my CC utilization down all at once, the best my score could be next month is a 610-625. So going from a potential score of 680 on the low end with a derog listed, to a 610 using the same criteria -without- a derog listed is a BIG difference.

559 to 680= 121 point difference that I would need to make up in in my new bucket to be where I could have been -with- the derog listed on my CR. Not very likely in my opinion.

It just doesnt seem right that a person with a derog listed on their CR could be near a 700 score when compared with someone with the same utilization and AAOA, without a derog listed and a perfect payment history.  

[smallfry]

I wouldn't put too much faith in the score ranges provided by the Simulators. Don't get discouraged.