What's a bucket?

[bichonmom]

I've been reading posts that talk about bucketing or rebucketing? I'm not familiar with this term... Could someone please explain what this is.

Thanks!

[daylove]

http://www.dailymarkets.com/contributor/2011/02/28/credit-scoring-and-buckets-%E2%80%93-fico%E2%80%9...

[llecs]

I read the article. It's close, except that we don't know what those buckets are; we can only guess. We do know that revolving balances/util isn't factored into it's own bucket otherwise you'd get rebucketed monthly as balances change. There are "dirty" buckets, but BK's are in its own category and I think recentness of baddies are included as the severity into different buckets. Then there are others not mentioned like recently added credit, mix of credit, etc.

FICO scoring is very complex. Your credit is contantly being compared to others with a similar credit profile. Buckets, aka scorecards, are actually a good thing. The formula prevents someone with a 1 year history from being compared directly with someone with a 20 year history, for example. Or someone with a new baddie being compared directly with someone with a pristine history. We've used this example quite a bit, but it is like college. Ever have that professor that graded on a sliding scale? If everyone takes a test and the highest grade is a 80%, then that person with the 80% gets an "A" and the grades slide below that. As it applies to FICO scoring, if the economy tanks and everybody does poorly with their credit,  then the damage of baddies aren't that bad. Or if everyone got new credit, then the impacted would be lessened because everyone did it. You can only be in on bucket at a time and changing buckets with improving can lead to a temporary score drop, but will rise as time passes. It is temporary.

[bichonmom]

Thank you for the link and the explanation. I kind of understand it now. You mentioned a 1-year history not being compared with a 20-year history, and it seems like that may actually work to my detriment. While I should have a 20+ year credit history, I don't. So, I wonder if because of my age, or that I have had a credit file for 20 years, I'm in the 20-year experience bucket; and yet, my credit history looks like I'm a newbie. It also seems like when my 6-year old collection comes off next year, my score may not go up as much as I'd like because I'll be in the "no baddies" bucket. This Fico stuff sure is complex!