VERY interesting info about FICO score points

[ztnjpv]

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@RobertEG wrote:

The chart seems to be a bit at odds with the mantra that is often heard on the site.... that FICO primarily scores % util of CL, not balance of revolving debt.

Since the chart was published by Fair Isaac, and does not even mention % util of credit limit, I would suspect that the lesson to be learned is that balances are significant.  Whether on a par with % util is not addressed, but it gives food for thought.... far beyond the relatively isolated issue of 0 balance vs some balance.  It extends up the ladder.

It would be great if % util was also included in the chart, thus giving some idea of their relative importance.

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Personally, I think it stinks that we should have to play around with this little minutiae to get better scores. I think the system should be better than that. It should be able process perfectly reasonable and plausible details and score accordingly without the consumer needing to change perfectly good credit behavior to teak out more points.

[jello77]

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RobertEG wrote:

The chart seems to be a bit at odds with the mantra that is often heard on the site.... that FICO primarily scores % util of CL, not balance of revolving debt.

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Here is my theory about what's going on with this chart.

Linked below is a FICO-sponsored page that describes in detail the 5 major categories that affect your score.

http://scoreinfo.org/FICO-Scores/Score-Ingredients.aspx

The page explains that each of the 5 major categories includes several different factors.

Regarding the "Amounts owed" category (which the chart calls "Outstanding Debt'), the page linked above shows this category includes these 6 factors:

(1) The amount owed on all accounts.

(2) The amount owed on different types of accounts.
______This is the factor listed in the chart as "Average balance on revolving accounts."

(3) Whether you are showing a balance on certain types of accounts.

(4) The number of accounts where you carry a balance.

(5) How much of the total credit line is being used on credit cards and other revolving credit accounts.
______This is commonly called "utilization."

(6) How much is still owed on installment loan accounts, compared with the original loan amounts

It appears to me that, for each of the 5 major categories, the chart has selected just one factor within each category to illustrate how changes in that particular factor affect your score.

Although the chart shows "Average balance on revolving accounts" and does NOT show utilization, I don't think this means revolving balances have any more importance relative to utilization than we have always assumed.

I don't think we can make any assumptions from this chart about the relative importance of any scoring factors WITHIN any of the 5 major categories.

That's how I would interpret this chart.

[RobertEG]

+1  Good analysis. 

But the selection of balances as a focus certainly indicates its significance.... unless it is just a curveball to confuse the details of their algorithm...

It does not, of course, say that balances are on a par, but it certainly signifies, a least to me, that they are scored to a higher weight than I previously assumed.

Similar thoughts are raised by the apparent par of no inquires with no public records or a 4 year credit history.

The chart raises more questions in my mind than it answers.  Perhaps that was its intent.....

[AndySoCal]

I have a paper copy of this chart you posted. I have had this for 10 years or so. An interesting question is if you have a store card that is a co-branded card this a VISA or AMEX is that considered a bankcard or not? If you found this chart on the can you pos the link? Thanks for this post

[jello77]

Andy,

Regarding whether a store card that is co-branded with Visa or Amex is considered a bankcard, my guess would be yes provided you can use it anywhere Visa or Amex is accepted. But I'm not really sure what FICO's definition of bankcard is.

Sorry, but I don't have a web link to the chart. I scanned it from a paper document. An employee at our company got the document when he attended a FICO presentation at a conference in 2010.

The document has one more interesting chart that I will post in a separate thread after I have a chance to scan it. It has to do with how your FICO score influences how many of those pre-approved credit card offers you receive in the mail. The result is not quite what you might expect.

[jello77]

On the same FICO document that contained the chart I posted above, I found another interesting illustration of score point changes.

I added the info to my original post.

[CS800]

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@llecs wrote:

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@jello77 wrote:

CK is useful for some things, but do not trust the "grades" it gives you.

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...and don't trust their FAKO scores.

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+1

[smallfry]

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@RobertEG wrote:

The chart seems to be a bit at odds with the mantra that is often heard on the site.... that FICO primarily scores % util of CL, not balance of revolving debt.

Since the chart was published by Fair Isaac, and does not even mention % util of credit limit, I would suspect that the lesson to be learned is that balances are significant.  Whether on a par with % util is not addressed, but it gives food for thought.... far beyond the relatively isolated issue of 0 balance vs some balance.  It extends up the ladder.

It would be great if % util was also included in the chart, thus giving some idea of their relative importance.

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If you look at the Fico Estimator you will notice that it asks how much your balances are on all revolving credit. We might only be talking about a ten point score difference between under $500 owed to $5000 owed. My EX FICO from PSECU is currently 825 with over 5K owed. I'll see if it goes up once the balances are close to 0 in a few months.

[MattH]

I believe each of the big three CRAs gives different relative weights to the revolving-credit data. Based on my experience when we could pull all three here, I concluded that for a long-and-clean file like mine, EX emphasized percent utilization more, TU emphasized number of accounts with balances, and EQ emphasized total balance mode. I have thought for a long time instead of statement balance it would make more sense to require every credit card card report HOW MUCH DEBT IF ANY IS CARRIED OVER INTO THE NEXT BILLING PERIOD, as that is what distinguishes convenience users like me from revolvers: I might run up hefty balances during a month in which I spend a lot, but I will pay it in full because I do not currently pay interest on non-mortgage debts.

[marty56]

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@MattH wrote:
I believe each of the big three CRAs gives different relative weights to the revolving-credit data. Based on my experience when we could pull all three here, I concluded that for a long-and-clean file like mine, EX emphasized percent utilization more, TU emphasized number of accounts with balances, and EQ emphasized total balance mode

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I also noticed this with my long-unclean file was well and now that EQ is clean, the effect seems more pronounced.