Ratio of loans:revolvers

[Anonymous]

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@Anonymous wrote:

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@Anonymous while you were on vacation the experts explained that the same people that create the score work on the ingredient section of the MF report, so it's actually not fluff apparently. 

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That's good to know regarding MF, but certainly wouldn't be the case for the front end of all CMS software.  But, even if what you said above is true of MF, going from and open loan to a closed one wouldn't impact credit mix, so there should be no shift in what the arbitrary "rating" for that factor is IMO.

[dragontears]

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@Anonymous wrote:

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@Anonymous wrote:

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@Anonymous while you were on vacation the experts explained that the same people that create the score work on the ingredient section of the MF report, so it's actually not fluff apparently. 

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That's good to know regarding MF, but certainly wouldn't be the case for the front end of all CMS software.  But, even if what you said above is true of MF, going from and open loan to a closed one wouldn't impact credit mix, so there should be no shift in what the arbitrary "rating" for that factor is IMO.

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@Anonymous I think you missed the a part of her profile that she was referring to. @Anonymous went from only having one open loan to having 2 open credit cards and the loan being closed. In that instance it makes sense that the "fluff" rating should change. 

[Thomas_Thumb]

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@Anonymous wrote:

So, I saw in a fico slide that the algorithm considers the ratio in the Mix category. 

Any info, DPs, or insights anyone? It's usually said another loan/SSL wouldn't help someone, but if one has many cards, they could be leaving points on the table, if the number of loans is less than the ideal unknown ratio. But I'm wondering if it also includes closed loans. 

Anyway big unknown. Seeking info and feedback. 

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Closed loans are included in mix. That has been specifically stated in Fico interviews. As for revolving accounts, open vs closed may impact mix. I have not seen a definitive statement from Fico on this. However, when it says "the latter need not be open" (referring to loans), I infer that the former (referring to revolving credit) needs to be open to count. [This is from Liz Weston's book, Your Credit Score: How to Improve the 3-Digit Number That Shapes Your Financial Future, 4th edition)

Here are a couple old threads for some background:

Thread from 2015 discussing credit mix:

https://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Does-the-quot-mix-quot-really-matter/m-p...

Closed accounts and credit mix

https://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Do-closed-accounts-help-credit-mix-at-al...

[Anonymous]

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@dragontears wrote:

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@Anonymous I think you missed the a part of her profile that she was referring to. @Anonymous went from only having one open loan to having 2 open credit cards and the loan being closed. In that instance it makes sense that the "fluff" rating should change. 

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Didn't she already have credit cards on her CR prior? 

Also while on the topic of these fluff ratings, when it comes to credit mix isn't it either satisfied or unsatisfied?  Like you've either got installment loan and revolver information on your CR (satisfied) or you only have 1 of the 2 (not satisfied).  Has something changed where different loan types or something else gives varying degrees of being satisfied?  If not, there should only be 2 possible fluff ratings of either fair or exceptional (or whatever fluff word for "the best" is used).  If adding additional credit types above revolver/one installment loan variety such as a second installment loan variety, charge card, etc. causes the fluff rating to change one of two things is possible.  One, the fluff ratings still aren't always indicative of score change or two, additional account types do in fact further impact credit mix above the traditional thought that it's either satisfied or not satisfied.

[Anonymous]

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@Anonymous wrote:

---

@Anonymous wrote:

---

---

@Anonymous while you were on vacation the experts explained that the same people that create the score work on the ingredient section of the MF report, so it's actually not fluff apparently. 

---

That's good to know regarding MF, but certainly wouldn't be the case for the front end of all CMS software.  But, even if what you said above is true of MF, going from and open loan to a closed one wouldn't impact credit mix, so there should be no shift in what the arbitrary "rating" for that factor is IMO.

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That's important to keep in mind about the other monitoring services. We only have information from the analytics team at FICO about the score ingredients on myFICO's reports.

I had one open SSL for 1 year (Dec 2017 to Dec 2018) before I applied for my first credit card.

It was the only account on my brand new credit file, and Credit Mix was Fair on the reports I got through a myFICO Premier subscription.

• I paid it off, and then applied for my first 2 credit cards in December 2018, at AoOA/AAoA 1yr 0mo.
• The following month, in January 2019, the SSL reported closed and my first 2 revolving accounts appeared on my file.
• Credit Mix changed from Fair to Very Good.
• Number of tradelines might be a lesser factor for Credit Mix, with the types of TLs being the main focus.
• Whatever it is, the FICO analytics team played a major role in programming that part of the interface

[Anonymous]

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@Anonymous wrote:

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@dragontears wrote:

---

---

@Anonymous I think you missed the a part of her profile that she was referring to. @Anonymous went from only having one open loan to having 2 open credit cards and the loan being closed. In that instance it makes sense that the "fluff" rating should change. 

---

Didn't she already have credit cards on her CR prior? 

Also while on the topic of these fluff ratings, when it comes to credit mix isn't it either satisfied or unsatisfied?  Like you've either got installment loan and revolver information on your CR (satisfied) or you only have 1 of the 2 (not satisfied).  Has something changed where different loan types or something else gives varying degrees of being satisfied?  If not, there should only be 2 possible fluff ratings of either fair or exceptional (or whatever fluff word for "the best" is used).  If adding additional credit types above revolver/one installment loan variety such as a second installment loan variety, charge card, etc. causes the fluff rating to change one of two things is possible.  One, the fluff ratings still aren't always indicative of score change or two, additional account types do in fact further impact credit mix above the traditional thought that it's either satisfied or not satisfied.

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@Anonymous yes but you assume that the mix ingredient only has one scoring factor.

Yes the credit diversity scoring factor is satisfied by a card and a closed loan, but what we're discussing is the mix ratio scoring factor (of loans to revolvers), which is a separate scoring factor from diversity, which determines the types of credit that are on your report. So, the score not only looks at the fact that you have both types of credit, but also at the ratio separately. 

. 

[Anonymous]

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@Thomas_Thumb wrote:

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@Anonymous wrote:

So, I saw in a fico slide that the algorithm considers the ratio in the Mix category. 

Any info, DPs, or insights anyone? It's usually said another loan/SSL wouldn't help someone, but if one has many cards, they could be leaving points on the table, if the number of loans is less than the ideal unknown ratio. But I'm wondering if it also includes closed loans. 

Anyway big unknown. Seeking info and feedback. 

---

Closed loans are included in mix. That has been specifically stated in Fico interviews. As for revolving accounts, open vs closed may impact mix. I have not seen a definitive statement from Fico on this. However, when it says "the latter need not be open" (referring to loans), I infer that the former (referring to revolving credit) needs to be open to count. [This is from Liz Weston's book, Your Credit Score: How to Improve the 3-Digit Number That Shapes Your Financial Future, 4th edition)

Here are a couple old threads for some background:

Thread from 2015 discussing credit mix:

https://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Does-the-quot-mix-quot-really-matter/m-p...

Closed accounts and credit mix

https://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Do-closed-accounts-help-credit-mix-at-al...

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@Thomas_Thumb awesome information as always. Do you feel that that would apply to all scoring factors within credit mix? 

Actually the first one I already had linked in the Primer, I think, but I'm gonna link the second one as well. Thanks @Thomas_Thumb !

[Anonymous]

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@Anonymous wrote:

---

@Anonymous wrote:

---

@Anonymous wrote:

---

---

@Anonymous while you were on vacation the experts explained that the same people that create the score work on the ingredient section of the MF report, so it's actually not fluff apparently. 

---

That's good to know regarding MF, but certainly wouldn't be the case for the front end of all CMS software.  But, even if what you said above is true of MF, going from and open loan to a closed one wouldn't impact credit mix, so there should be no shift in what the arbitrary "rating" for that factor is IMO.

---

That's important to keep in mind about the other monitoring services. We only have information from the analytics team at FICO about the score ingredients on myFICO's reports.

I had one open SSL for 1 year (Dec 2017 to Dec 2018) before I applied for my first credit card.

It was the only account on my brand new credit file, and Credit Mix was Fair on the reports I got through a myFICO Premier subscription.

• I paid it off, and then applied for my first 2 credit cards in December 2018, at AoOA/AAoA 1yr 0mo.
• The following month, in January 2019, the SSL reported closed and my first 2 revolving accounts appeared on my file.
• Credit Mix changed from Fair to Very Good.
• Number of tradelines might be a lesser factor for Credit Mix, with the types of TLs being the main focus.
• Whatever it is, the FICO analytics team played a major role in programming that part of the interface

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Number of tradelines is a scoring factor as well as segmentation factor, Im starting to believe. 

[Curious_George2]

This is a fascinating thread. I wonder though, is there really any evidence to support the notion that the ratio of revolvers to loans affects FICO scores?

In the 2017 thread that @Anonymous linked to in post 2, @Thomas_Thumb shared an article (permalink) that included a reference to ratios of 2:1 and 3:1.  But I think it's important to note that the article quoted two different people. One of them, named Anthony Sprauve, was identified as a FICO spokesperson. The other, Wayne Sanford, is a credit repair consultant who appears to have no official connection to FICO. The claim that 2:1 or 3:1 were good ratios was attributed to Sanford, not Sprauve. In other words, that didn't come from a FICO insider. 

@Anonymous, you said you had seen a FICO slide that referenced the ratio. Do you recall where that was and can you share it here?

@Brian_Earl_Spilner's experience, from post 9, of seeing the ratio cited as a reason for denied CLIs tells us that lenders can and sometimes do calculate and care about this ratio, but that doesn't mean the FICO scoring systems do. 

[Anonymous]

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@Curious_George2 wrote:

This is a fascinating thread. I wonder though, is there really any evidence to support the notion that the ratio of revolvers to loans affects FICO scores?

In the 2017 thread that @Anonymous linked to in post 2, @Thomas_Thumb shared an article (permalink) that included a reference to ratios of 2:1 and 3:1.  But I think it's important to note that the article quoted two different people. One of them, named Anthony Sprauve, was identified as a FICO spokesperson. The other, Wayne Sanford, is a credit repair consultant who appears to have no official connection to FICO. The claim that 2:1 or 3:1 were good ratios was attributed to Sanford, not Sprauve. In other words, that didn't come from a FICO insider. 

@Anonymous, you said you had seen a FICO slide that referenced the ratio. Do you recall where that was and can you share it here?

@Brian_Earl_Spilner's experience, from post 9, of seeing the ratio cited as a reason for denied CLIs tells us that lenders can and sometimes do calculate and care about this ratio, but that doesn't mean the FICO scoring systems do. 

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@Curious_George2 I obviously did not read that article closely enough, it was late and I was tired. And I haven't went back and read it again yet, although I plan to, especially now that you told me that. Thank you for pointing that out.

oh yes the slide I saw was definitely from fico and it definitely referenced the mix, but it did not give the ideal ratio. Yes, I think it's the first slide under credit mix in the Scoring Primer. I'll double check though.