I am Tom Quinn, Vice President of Scores at FICO and I am Tommy Lee, Director of Analytics Science at FICO. Ask us anything. We’ll be taking questions until 4:30pm ET on September 16th and we will post answers later that day.
In order to keep the Q&A valuable to all members, please refrain from asking questions specific to your credit situation.
**Answers start on page 7!**
Hi, why are we penalized for not carrying debt?
Wow thank you for this rare opportunity!
Can you say anything about the algorithm(s) that determine the score impact of a chapter 7 bankruptcy over time, say 1 year, 2 years, 18 months, 3 years etc until 10 years when it falls off? Often in Adverse Action letters, the language uses "recent" to describe a derogatory account/record, eg, "you have has a recent bankruptcy." I never know what that means, exactly.
So, I'd like to know more about what "recent" means and how the impact of my BK7 influences scores over time, so that I can plan future credit applications, eventual property acquisition, and other important financial decisions.
I have a couple that I've been wondering about:
1) What are the segmentation factors among the four dirty scorecards in FICO8?
2) What would an ideal or maximal profile look like with regards to credit mix in FICO8? What would distinguish a profile that was very good from one that was exceptional, in this regard? The algorithm appears to want more than just having an installment and a few revolvers.
Another question always asked here, which has a greater weight, chargeoffs with a balance or collections with a balance? Basically, which should be paid first for the most improvement?
Is there anything you are able to say about the accuracy/predictiveness of the FICO score, e.g. "for every X point reduction in score below a threshold, issuers experience defaults within 2 years at Y%?" And each new version is an attempt to improve on this, or are there other metrics issuers look at in evaluating whether to buy the scores?
How accurate/reliable are the free FICO scores that are offered by many credit cards, such as Chase Credit Journey and Discover FICO Credit Scorecard? Are they even close to real scores if I were to request them from the bureaus?
Thank you Tom and Tommy for this wonderful opportunity. Due to the way that different credit monitoring front-ends display both revolving utilization and total revolving credit limits differently in some cases, there has always been some confusion over how certain accounts are treated by FICO scoring models.
a.) Can you clarify whether closed revolving credit accounts reporting both a balance and a credit limit are indeed essentially treated the same as open revolving accounts until they reach a $0 balance for the purposes of both individual account and aggregate revolving utilization, particularly for FICO 8?
b.) Can you can confirm whether revolving HELOC accounts and revolving credit card accounts with very large reported limits ($100k+ for example) are weighted the same as smaller revolving accounts individually (i.e. does a $150k balance on a $200k HELOC carry the same weight as a $15k balance on a $20k limit credit card?) and whether they are weighted the same, or even factored in at all, for aggregate revolving utilization, particulary for FICO 8?
Thank you for taking the time to try and answer our questions. My question is, does a paid charged off account affect you negatively for the entire 7 years that it's on your reports? Or does the effect lessen over time, like a 30 or 60 day late does? Thank you again.