Changing Score

[divemedic]

My TU score Nov 1 was 725. FICO reasons:

Positives:

You have no late payments reported on your credit accounts

You demonstrate a relatively long credit history

Your most established credit obligation is 189 months old and your newest credit account was opened 18 months ago.

Negatives:

The proportion of balances to credit limits (high credit) on your revolving accounts is 56%. The average proportion of balances to credit limits (high credit) on revolving/charge accounts carried by U.S. consumers is around 36%.

The amount owed on your accounts is too high

The total amount owed on your credit obligations is $34809 (note, some accounts may not be included in this calculation by design)

On Nov 5, I paid $3,000 towards my CC's. This dropped my score by 2 points to 723. Here are my negatives now:

The proportion of balances to credit limits (high credit) on your revolving accounts is 47%. The average proportion of balances to credit limits (high credit) on revolving/charge accounts carried by U.S. consumers is around 36%

The amount owed on your accounts is too high

The total amount owed on your credit obligations is $31863 (note, some accounts may not be included in this calculation by design).

This is the problem with FICO. It appears random. My util went down by 9% and my debt by $3000. This DROPPED my score.

[direred]

This is the problem with FICO. It appears random. My util went down by 9% and my debt by $3000. This DROPPED my score.

My guess: if you hadn't paid it down, you'd have gone down anyway, just a bit more.

Remember, you're being ranked with others in your pool, and people enter and leave various pools at various times. My guess is that FICO scoring is pretty much strictly based on where you are in your pool and the possible score range for that pool. If you change pools (which also may have happened), then the scoring range is also different.

If you stayed in the same pool, a bunch of people leapfrogged over your head.

[vsjhoc]

If you change pools (which also may have happened), then the scoring range is also different.

Perhaps you moved from the "over 50% utilization" crowd and entered the swingin' "under 50%" pool, where you are now being compared to people with very low utilization ratios. Still, your score is over 720 which is great.

[divemedic]

I understand how scorecards work, but that does not make the system make sense. Think about it, you are comparing me to others with an "under 50% util" and assigning me a score, which will then be used to campare me with everyone.

This is what makes it possible for a person 6 months out of BK to have a score higher than a person with 90% util, and an otherwise unblemished report.

[direred]

Honestly, I think the top of the BK pool is too high. There's a great many people whose credit was worse than mine when they BKed, but have higher scores. I have a chargeoff from four years ago for $471 (still not reporting as paid, though I hope to get it deleted before it does report paid).

[vsjhoc]

I understand how scorecards work, but that does not make the system make sense.

I didn't say that the system makes sense, or that it's fair... just incredibly frustrating when things like this happen.

[LNY]

What about the people who have nothing on their reports but one store card and a student loan, yet they're sporting 720s?

The whole thing really is stupid. I wish it didn't have such a hold on all our lives, but it does.

[newbie7069]

Honestly, I think the top of the BK pool is too high. There's a great many people whose credit was worse than mine when they BKed, but have higher scores. I have a chargeoff from four years ago for $471 (still not reporting as paid, though I hope to get it deleted before it does report paid).

Preaching to the choir!!!!!!!!!!!!!!!!!

[vsjhoc]

The whole thing really is stupid. I wish it didn't have such a hold on all our lives, but it does.

Unfortunately, it's only going to get worse. I'm sure you know that auto insurers now determine your eligibility and your rates partly by reference to your credit score. You can argue all you want that there is no correlation between your accident history and bill payment history, but they use that data against you. What next?

[direred]

What about the people who have nothing on their reports but one store card and a student loan, yet they're sporting 720s?

1) I think that's where people start in the FICO score range.

2) I think this is why the median FICO score is 728, because 99% of these people haven't hit bumps yet.

[LNY]

1) I think that's where people start in the FICO score range.

2) I think this is why the median FICO score is 728, because 99% of these people haven't hit bumps yet.

I just made up the 720, really... Where did you hear that first part? That's something I've never heard. Interesting...

[direred]

I just made up the 720, really... Where did you hear that first part? That's something I've never heard. Interesting...

Myfico.com, click on "About FICO scores." I was 5 points off, it's 723 (I do believe it used to be 728, though). Also see this.

[divemedic]

I think that the stats FICO uses are horse hockey. Read:

Credit Utilization

About 40% of credit card holders carry a balance of less than $1,000. About 15% are far less conservative in their use of credit cards and have total card balances in excess of $10,000. When we look at the total of all credit obligations combined (except mortgage loans), 48% of consumers carry less than $5,000 of debt. This includes all credit cards, lines of credit, and loans-everything but mortgages. Nearly 37% carry more than $10,000 of non-mortgage-related debt as reported to the credit bureaus.

52% of consumers have a car at least 4 years old, if that is to be believed. After all, how can you have less than $5K in debt unless you don't have an auto loan?

Since over 28 million new cars were sold in the US in the last four years, who is buying them?

[LNY]

Myfico.com, click on "About FICO scores." I was 5 points off, it's 723 (I do believe it used to be 728, though). Also see this.

I mean about starting off at 720. I've never heard that! Can you remember where you might have seen it?

[newbie7069]

So how come we are constantly being told on the news about how high America's cc/etc. debt is? They even make commercials making fun of it now~~the guy pushing the lawnmower was too funny.

Agreed, horse hockey!

I've decided it's yet another ploy to make us all feel inadaquate

[LNY]

So how come we are constantly being told on the news about how high America's cc/etc. debt is? They even make commercials making fun of it now~~the guy pushing the lawnmower was too funny.

Agreed, horse hockey!

I've decided it's yet another ploy to make us all feel inadaquate

I LOVE THAT COMMERCIAL!!!! "I'm in debt up to my eyeballs..."

[divemedic]

Especially since here:

http://www.usatoday.com/money/perfi/general/2004-03-17-debtcover_x.htm

The article states that the average American has $4663 in CC debt.

•Plastic. Households in 2003 racked up $412 billion in credit card charges, up 185% from five years ago, according to Standard & Poor's. The average balance on open credit cards in December was $4,616.90, according to credit bureau Experian.

[direred]

I mean about starting off at 720. I've never heard that! Can you remember where you might have seen it?

Oh, I've never seen it written, but I've noted various posters to various boards who say they have X months of credit and a FICO score (usually between 710 and 730) and what should they apply for?

[direred]

I think that the stats FICO uses are horse hockey. Read:

52% of consumers have a car at least 4 years old, if that is to be believed. After all, how can you have less than $5K in debt unless you don't have an auto loan?

A lot of people pay cash for cars. DH did.

Also, a lot of people pay off their loans early. My mom did.

And then there's me....

[divemedic]

I am sure alot of them do, but the VAST majority finance, and pay the notes.

[LNY]

Don't a lot of people also buy used cars, without financing? Either from a dealership or privately (local newspaper ads, signs in the car window, Craigslist etc.)?

Also, there's many of us out here who live in cities and don't buy cars at all.

[divemedic]

The point here is that they claim 52% of the public has less than $5K in debt.

According to the census bureau, 78% of the population (300 million total) of the US is over 18. That means there are 234 million adults in the US.

US manufacturers report that 7 million new cars a year are sold in the US. That equals 28 million in 4 years. Couple that with the fact that the average American CC balance is about $4K, and I find it impossible that 52% of the public owes less than 5K.

[newbie7069]

...and I find it impossible that 52% of the public owes less than 5K.

Unless of course, those 52% all only have Cap One/Orchard/Household cards with CLs of $300. And that 15% with more than $10K are the only ones in America getting any CL luvin: which would make sense in that only about 10-15% of Americans make over $100K a yr.

[direred]

The point here is that they claim 52% of the public has less than $5K in debt.

According to the census bureau, 78% of the population (300 million total) of the US is over 18. That means there are 234 million adults in the US.

US manufacturers report that 7 million new cars a year are sold in the US. That equals 28 million in 4 years. Couple that with the fact that the average American CC balance is about $4K, and I find it impossible that 52% of the public owes less than 5K.

"Nearly 37% carry more than $10,000 of non-mortgage-related debt as reported to the credit bureaus."

Probably most of that difference is the remaining balance on auto loans. A lot of people put significant money down and/or have significant trade-ins.

[LNY]

"The public" in their calculations takes into account all adults 18 and over, which ends up including lots of teenagers who owe either nothing or very little... bringing the average debt down considerably.

There's also recently post-BK folks who either haven't yet had the opportunity to run up $4k in debt or have chosen not to. And people who rent, and therefore have no huge mortgage cutting into their income and necessitating CC use. Living in cities with no cars (and thus no auto loan or insurance expenses) takes it down further. There are also people like me who make it their life's work, for whatever personal reasons, to not have more than $1k in debt... no matter what lifestyle changes that takes.

Then there are older people whose mortgages are paid off and don't believe in credit card debt and either don't use them or pay in full. And people who make enough money to not have credit card debt at all... can't forget them.

Basically there's a large part of the population that has minimal or no debt due to age, lifestyle, income, beliefs or personal circumstances. These people are the ones who bring the average CC debt down.