My understanding is that as you increase (or hopefully not decrease) your scores you are bracketed/bucketed into a population of people with similar scores. For example you may be in the subprime group with people who have bad credit. As your score improves, you are removed from this population and normalized into another group of people you typically have higher scores than your last group. (think of it as going from JV to Varisty). As a result, your scores tend to take a hit as you are now compared to people that will typically have higher scores than you. The benefit is that in the new bucket your scores are supposed to normalize with the rest of the group in a quicker fashion. This results in quicker gains (and/or loses) to your scores.
Someone let me know if my understanding of this concept is off.
As you move up in score cards and the score drops; how long does it typically take to recover and go back up if you continue on your pace to credit improvement (assuming one doesnt do anything to trash their credit again)?
Rebucketing changes the weight of factos such as AAoA, Utilization, and number of cards reporting a balance. In my case when my oldest account reached 4 years my FICO plunged from 750s to 690 without any other changes. The reason, which became apparent over the following weeks, was the new scorecard (bucket) weighs the number of cards with zero balances very heavily and the earlier bucket didn't. Since all my cards had small, but non zero balances at the time my FICO dropped like a rock. This makes sense since when you first have credit you are likely to use all your cards and utilization counts more heavily then. I fully recovered simply by adding a new account and zeroing another account. In all cases my util was low.
Remember, the percentages that each publsihed factor has is a global average. Buckets each have their own weights which can deviate from the averages. So, if you are rebucketed just try different things to see what the FICO score is most sensitive to in the new bucket.
The bucket used to give you a score is based on your credit characteristics. The each score model has several buckets to accomplish the socring. You can go to FICO.com and look at scores. What the forum calls buckets are called scorecards on FICO and elsewhere. As your credit profile changes the scorecard or bucket used may change as well..
Hate to bump and aged thread, but this is a very helpful read! I'm glad Lexie referred to it in another post. I learned something and when I get home later, I'll have the time and desire to read all of this thoroughly!
Complicated stuff.....but good to know for when these weird score changes occur. I'm gonna assume that 98% of America have no idea what "bucketing" is......LOL>
I feel the bucketing system favors lenders.
Very informative. I was trying to figure out why my January scores sank like the Titanic despite falling balances and increased limits when I remembered something about scorecards being discussed here. Now I feel a little less bummed out.