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We’re Tom Quinn & Tommy Lee - FICO Score Experts! Ask us anything.

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myFICO Employee

Re: We’re Tom Quinn & Tommy Lee - FICO Score Experts! Ask us anything.


@Pit-Smoker wrote:

When I pay off a personal loan, thus achieving an evident goal, illustrating that I am a responsible borrower who completes my obligations AND reducing my credit burden in the process, my score drops based on the closing of an account.    How does this make sense?   

 

Thank you for this opportunity.   

 



Paul Panichelli, Principal Scientist: Having a personal loan with no missed payments and a low balance along with other types of credit demonstrates that a person is able to manage a variety of credit types. Having a low installment loan balance to loan amount ratio is considered slightly less risky than having a 0% installment loan ratio. In other words, after the loan is paid off, it no longer shows that you are actively managing such a loan.

Message 91 of 112
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myFICO Employee

Re: We’re Tom Quinn & Tommy Lee - FICO Score Experts! Ask us anything.


@Pit-Smoker wrote:

We often hear the words.... but this effect (of your prior indiscretion) will decrease over time....  

When it comes to 30 lates, 60 lates, etc, can you speak to any gradual increase in terms of points?  Most users report the change and get a jump only after a full 7 years, despite the "effect" language.    



Paul Panichelli, Principal Scientist: All else being held equal, as delinquencies age and no new delinquencies are added, consumers will generally see the impact to their score gradually decrease over time, not just a jump after a full 7 years.

Message 92 of 112
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myFICO Employee

Re: We’re Tom Quinn & Tommy Lee - FICO Score Experts! Ask us anything.


@Saeren wrote:

What determines whether an installment loan will code as a consumer finance account and do all installment loans from that financial institution get marked as consumer finance accounts? This is something that really confuses everyone because the reason code doesn't appear until you don't have any serious reason codes left. Some clarification would be wonderful. 



Paul Panichelli, Principal Scientist: The credit bureaus assign the coding that is used for identifying these types of loans. 

Message 93 of 112
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myFICO Employee

Re: We’re Tom Quinn & Tommy Lee - FICO Score Experts! Ask us anything.


@ChargedUp wrote:

Hello gentlemen, and thank you for your time!

 

- Is there any internal scoring difference between having loans or credit cards from a conventional bank (Chase, US Bank, Citi, etc.) vs. having similar products from a credit union in any FICO models?

- How is utilization scored on a "charge card" (ie: Amex Gold or Platinum) in regards to using a "Pay over Time" feature on FICO 10T?

- Are there any internal FICO scoring methods being used by any of the lesser spoken of credit reporting agencies? (Lexis Nexus, Sagestream, etc.)

- How long must one's "average age of accounts" be before it is possible to achieve an 850 FICO 8 score? 

- Are there any improvements/new features in the pipline for the My FICO subscription service? Once 10T goes live, will we have access to the same trending data as lenders with the subscription service?

 



Paul Panichelli, Principal Scientist: 

 

1. In general, there should not be a difference in most versions of the FICO Scores, but it depends on how the credit bureaus have coded these accounts.

2. This depends on how it was reported, however, open-ended accounts are not included in utilization characteristics.

4. Visit the following link for more information about an 850 FICO Score. https://www.fico.com/blogs/850-fico-score

Message 94 of 112
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myFICO Employee

Re: We’re Tom Quinn & Tommy Lee - FICO Score Experts! Ask us anything.


@CassieCard wrote:

Is this a correct interpretation of how the scoring module transforms percentages?

 

Balance / Limit

$541.00 / $6000 = 0.09016

0.09016 * 100 = 9.016% = 9.02%

ceiling(9.02) = 10.0

 

10% would be used for scoring, so 9.02% would not be considered under 10% for FICO scoring purposes.



Paul Panichelli, Principal Scientist: In general, the calculation is a rounded to the nearest percent. For the example given, this would be 9%.

Message 95 of 112
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myFICO Employee

Re: We’re Tom Quinn & Tommy Lee - FICO Score Experts! Ask us anything.


@MichaelMyers wrote:
Here's my question: If a consumer has a charge-off on their credit report, is it possible for him to obtain a high score, like in the 700's, or is that only possible once the charge-off ages off the report?


Paul Panichelli, Principal Scientist: It is possible, though not frequent.

Message 96 of 112
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myFICO Employee

Re: We’re Tom Quinn & Tommy Lee - FICO Score Experts! Ask us anything.


@MichaelMyers wrote:
Another question: why does a negative event, such as a late payment, drop a FICO score immediately but a positive event, such as paying off a loan, doesn't immediately raise the score?


Paul Panichelli, Principal Scientist: First, note that a negative event doesn’t necessarily drop a FICO Score immediately—for example, if the FICO Score is already low.

 

Additional comments:  Negative history is the most important predictor of future risk, so a new negative event has a large impact on a FICO Score. An analogy may  be helpful here, like building a reputation—a good reputation gets built over time, but a reputation can be damaged quickly with one misjudgment.

 

Also, note that a FICO Score measures credit risk based on a credit file at a single point in time. So when considering why a score changed from a missed payment, it’s helpful to consider what the credit file looked like before and after the missed payment. If the credit file indicates significantly greater (or lesser) credit risk than before, then a FICO Score will change more than if the credit risk is similar before and after the missed payment.

 

Please see following blog post for more info: https://www.fico.com/blogs/how-credit-actions-impact-fico-scores

Message 97 of 112
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myFICO Employee

Re: We’re Tom Quinn & Tommy Lee - FICO Score Experts! Ask us anything.


@Meanmchine wrote:

@ChargedUp wrote:

Hello gentlemen, and thank you for your time!

 

 

- How long must one's "average age of accounts" be before it is possible to achieve an 850 FICO 8 score? 

 

 


Im also interested in this question

Let me add these questions ---

What's the minimum age your oldest account has to be to get an 850 score

How many active accounts do you need to have for an 850 score

 

Realistically, how is it remotely possible that an 18 year old college student can sport an 800+ score

 

Sorry CU if I trampled a little bit on your question

 



Paul Panichelli, Principal Scientist: Visit the following link for more information about an 850 FICO Score: https://www.fico.com/blogs/850-fico-score

Message 98 of 112
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myFICO Employee

Re: We’re Tom Quinn & Tommy Lee - FICO Score Experts! Ask us anything.


@lhcole77 wrote:

Can you please tell us more about this reason listed under negative score impacts?

 

How many is too many? What time period is considered recent? Ex: Open 2 new accounts within 60 days? 3 in 6 months? Etc.

 

Many New Accounts

You've recently opened too many new credit accounts.

The FICO® Score considers the number of recent credit account openings. Opening several credit accounts in a short time period is reflective of greater risk - especially for people with shorter credit histories.

 



Paul Panichelli, Principal Scientist: It depends. For one, opening just one new account in a recent time period can impact someone’s score. Even a recent opening of just one new account is indicative of higher risk compared to someone who hasn’t opened any new accounts.  Consumers with less credit history are more likely to be impacted by just one, whereas consumers with a longer credit history may not be.

Message 99 of 112
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myFICO Employee

Re: We’re Tom Quinn & Tommy Lee - FICO Score Experts! Ask us anything.


@lhcole77 wrote:

Can you please tell us more about this reason listed under negative score impacts?

 

How many is too many? Is it a % of accounts or is it a raw number? Are only open accounts factored in? Or are closed accounts included as well? What is ideal accounts reporting a balance for just credit cards? What is ideal for all accounts?

 
Accounts With Balances

You have too many credit accounts with balances.

The FICO® Score considers the number of accounts on a credit report showing a balance. Generally speaking, carrying fewer accounts with balances is considered less risky. Your credit report may show a balance on credit cards even if they're paid in full each month. The total balance of the last statement is typically the amount shown on a credit report.



Paul Panichelli, Principal Scientist: Both the number and percent of accounts with balances can be factors in a FICO Score calculation.  In some cases (consumers with less credit history and/or fewer accounts), even one or two accounts with balances may be too many.

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