Why daughter score is 681

[AyaMai]

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@Thomas_Thumb wrote:

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@AyaMai wrote:

Met with daughter and was surprised to find out that her Experian Fico 8 score is 681, thinking she was far higher than my own which is 775. Average Age of Accounts is 4 years 3 months, mine is less than 2 years, Age of Oldest Account 8 years and 1 month. She has 2 credit cards with Bank of  America with 9k and 10k limit, one card has balance of $621.00, 7% utilization. Just paid off her Auto loan $19300 Apr 1.9% in 68 months instead of 72 months.  She has 6 student loans total of $10,761.29  she can pay it off but I think she is waiting for President Biden to forgive her student loans :-) 

I have advised her in the past to get a new card every 6 months starting with Chase Freedom Unlimited/Flex and to do it before she pays off her car loan before her score will drop unfortunately she didn't. Found out also she was using Credit Karma to check her score.

What are your thoughts, how to improve her score, does she need a $1000 personal loan to improve her score, is it her thin file which is hurting her score. She is frugal, saves a very high percentage of her income and invests at the same time. She uses BoA Alaska Ailrines for her purchases which I think it is not a great idea. Thank you in advance for your sugesstions and help.

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My daughter has 2 cards only (each 8 years old now) and no loans open or closed. Her Fico 8 scores fluctuate between 785 and 810. A thin file can certainly score over 800 if the open and closed accounts have sufficient age. Your daughter's "thin" file is not having a significant negative impact on her Fico scores. In fact, she has plently of installment accounts.

Paying off the car loan would likely have caused a minor score drop due to aggregate balance to loan ratio increasing to 100% from under 40%. Adding a small personal loan is unlikely to help credit score because she still has open loans (student) on file. In fact, the new account may hurt score in the short term. The 1st order of business is for her to gain access to Fico scores. A 3rd card is not necessary for 800+ Fico 8 or Fico 9 scores but, will make it easier to get there.

Your daughter's score is not a Fico score. Vantagescore 3.0 does penalize far more severly than Fico for having too few accounts. The VS3 scoring algorithm prefers 11 or more accounts. Fico is completely satisfied with 3 revolvers and 1 loan. The below is from Credit Karma relating to VS3 - It can be ignored for Fico scoring

I suspect VS3 is also penalizing your daughter more than Fico for her unpaid student loan(s). However, if the loans are not in deferment, then lack of payments may result in late payment scoring penalties. If  lates reach 90 or 120 days, they can result in a 100 point scoring penality on VS3 or any Fico version.

Assuming your daughter has no lates, her Fico 8 scores should be 720 or higher. If true, she could get a 3rd card anytime.

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The score is FICO not Vantage, she is an authorized user on my Amex Platinum. Amex  switched to FICO from Vantage as perk for their  customers. https://www.fool.com/the-ascent/credit-cards/articles/american-express-has-made-a-big-upgrade-to-its...

[NoHardLimits]

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@AyaMai wrote:

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The score is FICO not Vantage, she is an authorized user on my Amex Platinum. Amex  switched to FICO from Vantage as perk for their  customers. https://www.fool.com/the-ascent/credit-cards/articles/american-express-has-made-a-big-upgrade-to-its...

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What are the descriptions under each of the Score Ingredients?  Those will help diagnose what's holding down her score.

[AyaMai]

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@NoHardLimits wrote:

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@AyaMai wrote:

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The score is FICO not Vantage, she is an authorized user on my Amex Platinum. Amex  switched to FICO from Vantage as perk for their  customers. https://www.fool.com/the-ascent/credit-cards/articles/american-express-has-made-a-big-upgrade-to-its...

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What are the descriptions under each of the Score Ingredients?  Those will help diagnose what's holding down her score.

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Payment history Very Good

Amount of debt  Very Good

Length of credit history  Good

Amount of new credit      Very Good

Credit Mix                              Very Good

[NoHardLimits]

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@AyaMai wrote:

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@NoHardLimits wrote:

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@AyaMai wrote:

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The score is FICO not Vantage, she is an authorized user on my Amex Platinum. Amex  switched to FICO from Vantage as perk for their  customers. https://www.fool.com/the-ascent/credit-cards/articles/american-express-has-made-a-big-upgrade-to-its...

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What are the descriptions under each of the Score Ingredients?  Those will help diagnose what's holding down her score.

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Payment history Very Good

Amount of debt  Very Good

Length of credit history  Good

Amount of new credit      Very Good

Credit Mix                              Very Good

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Click on each item to display a pop up window with detailed information for each Score Ingredient.

Also, look at View Full Score History to see changes over time.

[FlaDude]

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@AyaMai wrote:

Amount of debt  Very Good

Length of credit history  Good

Amount of new credit      Very Good

Credit Mix                              Very Good

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Have you verified that there are no late payments?

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[CreditPoor]

Sorry to say, but a "Very Good" for payment is an indicator of a late payment. Double check the history.

[AyaMai]

"2. Nothing of what you have described would cause her FICO scores to be as low as 681, so there must be some other factor(s) at play."

You were correct, there was a collection, it was reported October 2019 and was paid in December. It was plain negligence from her part not paying her bill which costed her score to drop dramatically. The collection was reported to Experian, TransUnion but not Equifax which her score is 777.  The good part she has never been interested in adding more credit cards, since she turned 18 and got a visa on my advice. The collection will drip October 2026.  I would reommend her to apply for AAA Daily Advantage card or AAA Travel Advantage card since they pull from Equifax.

[AyaMai]

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@GZG wrote:

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@SouthJamaica wrote:

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1. No, a loan wouldn't help her scores.

2. Nothing of what you have described would cause her FICO scores to be as low as 681, so there must be some other factor(s) at play.

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this, a 680 score feels like there might be a 30 day late somewhere, but perhaps not?

perhaps there is a temporary penalty for having paid off the auto loan currently that will bounce back in a few months

the student loans will keep the score suppressed at least ~30 points while they sit at 100% utilization at least compared to an ideal file where there's a loan nearly paid off

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A collection.

[AyaMai]

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@FicoMike0 wrote:

Creditkarma is vantage, not fico, but still should be higher.  If the loan s are still at 100% I suppose that hurts some.  I'd do several sources, ck, experian, myfico, amexmycredit, etc and look at the explanations\codes.  Check the credit reports for errors.

Must be something there.

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Yes there is a collection

[AyaMai]

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@FlaDude wrote:

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@AyaMai wrote:

Amount of debt  Very Good

Length of credit history  Good

Amount of new credit      Very Good

Credit Mix                              Very Good

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Have you verified that there are no late payments?

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Yes there is a collection