What does having a FICO 8 in the 800's typically mean?

[Flex1]

I'm at 787 Fico8 and for me, I have no revolving balances. So I started wondering.... What about all the people who have even higher Fico 8's to the top of the scale? My thoughts is that this has something to do with carrying little to no balances on the cards and or very small balances with such high limits that utilization is always in a favorable place. Can you guys give me your thoughts on this? I know that age of account and history etc... have a factor in this. But just generally speaking if you have no negative history at all. 

[NRB525]

I believe No Negatives is a requirement to be over 800, but there are probably some long-aged 30-day late examples over 800.

When you say you have no revolving balances, what are the balances on the last statements, for each of your revolving credit cards? You want at least some small amount to report as a statement balance, even if you are paying in full by the due date.

The term Revolving Balances often means the cardholder is not paying interest, and that is a good objective. You still want to see a balance reported on at least one card. If all cards report zero balances on the statement, there is a scoring penalty in FICO 8.

[Anonymous]

Good catch by NRB.  The penalty he mentions is not trivial: a solid 15-20 points. 

[Anonymous]

Age of Oldest Account continues to give you some help up until 17 years at least.  Possible benefit from going higher but not proven.

Average Age of Accounts (AAoA) continues to give you some help up until 7.66 years at least.  Possible benefit from going higher but not proven.

Age of Youngest Account appears to give you benefit when it crosses 3 months, 6 months, and most notably 12 months.  Some people speculate about an advantage at 24 months but that is unproven.

Percentage of accounts that are new (define new here as < 12 months old) likely affects your score, but specific info here is sketchy.

Inquiries harm your score as you doubtless know, though not by much.  Ideal number is zero but it is unwise to allow a hyperworry here to prevent you from opening occasional accounts as needed.

That's all age-related stuff.

Having open installment debt (aka a loan) helps FICO 8 if your open loans are mostly but not entirely paid off.  The boost here can be 30-40 points, compared with having no open loans.

All FICO models benefit from having at least three open credit cards, one loan (closed or open), and six accounts total (closed or open).  Exact numbers are not known.  There might be some marginal value in having seven open accounts and ten accounts total, but that's speculative.

There may also be a small penalty from having a huge number of open accounts (e.g. 20 cards).  There is some evidence from that based on negative reason statements.

Consumer Finance Accounts (CFAs) hurt one's score even if they are managed perfectly.  CFAs should be avoided at all costs, though the penalty is probably not that much.

No FICO model penalizes you for the presence of store cards or for not having big credit limits, though other non-FICO models often do.

[SouthJamaica]

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@Flex1 wrote:

I'm at 787 Fico8 and for me, I have no revolving balances. So I started wondering.... What about all the people who have even higher Fico 8's to the top of the scale? My thoughts is that this has something to do with carrying little to no balances on the cards and or very small balances with such high limits that utilization is always in a favorable place. Can you guys give me your thoughts on this? I know that age of account and history etc... have a factor in this. But just generally speaking if you have no negative history at all. 

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The optimal scoring status for revolving accounts is to (a) pay in full every month, (b) allow one account to report a small balance before paying it, (c) have any other revolving accounts report a zero balance when the statement cuts.

It is not necessary to do this to have super high scores, but it assures that you won't be penalized for revolving account utilization in any FICO scoring model.

[Anonymous]

PS.  I didn't mention revolving balances since NRB already mentioned how to optimize those.  Having all cards at zero except one true credit card showing a small positive balance -- this strategy is often called AZEO and will optimize this part of your score for any FICO model.

Many people can deviate from AZEO depending on their particular profile and which FICO model we are talking about without any scoring penalty.

The three scoring factors here are:

Total CC utilization

Individual CC utilization

Number of open accounts showing a positive balance

As a long term strategy you are fine with keeping total under 28.99% and individual under 48.99% and not worrying about the third factor.

When you are planning to apply for a new account (and assuming you need a scoring boost) you can implement AZEO.

Some people find value in AZEO as a constant strategy (every month) if their scores are low and they feel like they want every extra available point when existing creditors do a monthly or quarterly soft pull to monitor their risk.  I suppose that would lower your chance of Adverse Action by an existing creditor if your scores are very borderline.

[Anonymous]

I see that SouthJ beat me to it!  Nice post by him.

[Revelate]

True regarding 800 being basically impossible with a 30D late under the old (FICO 04 / 98) models.

Likewise true getting 800 on FICO 8, probably have to be non-trivially aged.

FICO 9, well, CFA, 0 inquiries, random balances, and awful installment utilization and a 30D late from 7 months prior to Penfed's November pull resulted in a 791 score.  Decent chance if I had highly optimized installment utilization I might've broken 800 even with that recent 30D.

Gotta love FICO 9 .

[Anonymous]

Thank you for this post. 

I had a question on the AZEO plan.

I have three secured cards -- I make one purchase on them each month for under 10 dollars.

So my utilization is 1 or 2 per cent.

Will I get a FICO boost if I go strictly with AZEO -- use ONLY one card and keep the other two at zero balance?

Or are my utliization numbers so low that it will not make much difference.

Thanks.

[HeavenOhio]

My guess is that AZEO will likely mean a few points over what you have now, but it won't likely be earth shattering.

The effect of number/percentage of cards reporting positive balances can vary from profile to profile. It's a pretty straightforward test if you'd like to find out how it applies to you. If you test, keep the positive balance or balances low like you have been to avoid throwing another variable into the equation.