My Scores have been declining

[haulingthescoreup]

Sorry if it read that way. It seemed like all the differing responses were causing confusion. It's very true that when you only have a few accounts that can be scored, the slightest thing will have enormous influence on scores. GL

[Anonymous]

No problem. I'm very sensitive about this. I think you just summed it up--due to the anchor dragging me down, namely all the accounts that went into BK, and how relatively few good/new accounts I have, my score reacts strongly to very slight bumps in the road. If I had a better score, I could get more good accounts; but when I try to get more good accounts, it hurts my score. Back to Catch-22. Thus, my frustration.

The funny thing, is while FICO kills you for the BK, in some ways, I'm the best credit out there. I certainly cannot go BK, which most people have the option of doing; if another adverse event hit, I'd have to deal with it some other way. Second, my total debt to income is very low, and while FICO doesn't know this, you'd think an underwriter with half a brain could figure it out. However, they no longer underwrite; they just use the FICO score and follow a formula.

[haulingthescoreup]

That's true; no one wants to take risks in this day and age, knowing that they'll get the blame if anything goes wrong.

Whatever you can do with the util in the meantime will probably help a lot. I don't know if the sim is very believable for those with new-ish BK's.

[Anonymous]

Skil - Ok, let's take this one element at a time:

--BK discharged 3 years ago.  This is good and is not hurting you as much as you think.  You are in a "BK" scoring bucket, which after everything else clears up could actually help you.   I was discharged in Oct 07 and have scores in the 690's as of July 08 (9 months later), so it can be done.

--Inquiries - you say you had 12 last December.  That means in about 4 months or so, these inquiries will no longer be hurting your score.

--Car loan for your son.  I assume you co-signed for it.   Who was the loan through?   A national lender or a smaller company?

--The "same as cash"deal with Apple could be considered a "consumer finance" account, which will cost you a few points.  Maybe a mod can give more info on this.

--Low debt to income is great for a manual review, but for FICO scoring, it means nothing as you know.  Remember, this formula is designed to predict risk.  Just because someone makes big bucks does NOT automatically make them a less riskier borrower.

--Age of accounts - How old is your oldest account?  Sounds like your oldest is no more than 3 years, and your avg. age of accounts is not much more than 1 year.  Unfortunately, the only way to remedy this is with time.  You need age, both oldest account as well as avg. age.   So, I would recommend you do NOT apply for more credit unless absolutely necessary. 

--Utilization - this is another area that is likely hurting you.   FICO (in my opinion) properly assumes that the closer to your limits you are, the more likely it is that you will default.  Not that you definitely will, just that you are more likely to than someone with, say 10% utilization.

To summarize, you need time to age your accounts, and you should find a way to both increase your existing credit limits and to limit the amounts that report to the credit bureaus.   The most obvious way to do this is to pay some cards in full BEFORE the statement date so it reports as $0 or a low balance.  You may not want to do this, but it would be one way to increase your scores by lowering your utilization %.

The perfect payment history is great, and needs to continue without exception.  As others have stated, since you appear to have a relatively new file, every little thing affects your score, both up and down.   Of course, please feel free to correct or clarify.

Message Edited by Boscoe on 08-11-2008 07:40 PM

[Anonymous]

Boscoe--Thanks! It is nice that you and others are providing me with such detailed data.

In order:

First, since you were discharged less than a year ago, with scores towards 700, I need to know how you did it! What I do know, is a BK isn't the same for everyone. Mine had MANY accounts that went under, as we were a large credit. Please share with me somehow the way you went about this.

Second, the car loan is in my name only. The car is for my son, not the loan-lucky him! The lender is a local bank

Third, the "same as cash" was a credit card, with 6 months no interest for Apple products

Big bucks does not equal good credit. BUT, big bucks relative to small credit lines should be OK, regardless of usage. The problem is, credit relative to income is not what it should be, due to FICO score. I'm using a reasonable amount of credit, but that turns out to be a bigger percentage of what I have available than it should be.

Oldest account is supposedly 3 years, although one or two pre BK accounts appear to be alive on my credit reports--it could be a fiction, but it favors me.

Actually, the wave of new accounts/credit pulls was October/november, so by December I figure it all will be one year old, and perhaps that will help a lot

I DID try to increase my current lines, and mostly, but not entirely, was declined, due to Fico, and too many new accounts. Unfortunately, one card got lowered, as they saw my new Fico, and lowered my limit! This approach has its risks.

SO, I guess we get to utilization. The only useful thing here, other than trying not to use the cards, is to pre-pay them, which is clever. I will do it to my ability, as I like the idea. However, it really changes one's personal cash flow, by 30 days, to do this. But, to some extent, this can be done.

[Anonymous]

The OP's best course of action is to reduce total utilization to under 10%, and only carry a balance on some cards. The assessment others have made that the flurry of new accounts reduced Average Age of Accounts (AAoA) and, along with inquiries, caused the score drop is almost certainly correct.

I believe the BK bucket has a higher sensitivity to new accounts, because FICO scoring is steeped in the paradigm that past performance is the best indicator of future results. The formula is therefore "looking" for signs the consumer will repeat his or her past mistakes of getting in over their head.

And income has no effect on FICO scoring. None, zero, zilch. Rightly or wrongly.

[Anonymous]

Skilover - My BK included 4 mtg accounts and 3 credit card accounts.  

I would say the reasons for my scores being where they are 1 year out of bk is as follows:

--Oldest account is an HSBC credit card from 1995, so this gives me about 13 years of credit history.  This account was a zero balance when I filed, but the creditor closed it due to 3 months of inactivity just before I filed.

--Avg age of accounts is only 4 years old, since 5 of my 6 credit cards were opened in 2006-2008.

--I have a car loan and a home equity loan that are both reporting open, so I get points for credit mix.

--Only 1 or 2 inquiries in the last year, and all accounts are at least 3 months old, and all but 2 are 18 months or longer.

--Utilization of credit cards is below 5%.  This is a biggie to explain my scores.

Your biggest 2 issues are that  your utilization is too high and the age of your file is too small.   Keep the util below 10% and open no more than 2 more cc's as soon as possible so you can start increasing the age of your file.