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How does % available credit usage, bankruptcy, credit inquiries, deliquent balances, open accounts, & mortgage affect your credit score?

I couldn't find specific information on this on FW so I signed up for a trial at Credit Expert. I got my credit score along with a simulation of how various changes would affect my score. I'm hoping others will find this useful so that they don't have to go thru the hassle of signing up for a trial to get some basic information. This is all useful knowledge for us FWers anyhow. Keep in mind, all the services differ slightly in how they determine your credit score and what affects it.

To start, my credit is around 760. The negatives to my score are mainly that I don't have a long term credit card (ie. >10 yrs though I would've but I cancelled my earlier cards) and that I've had several inquiries (5 or 6) in the past year. According to this report, I'm in the 75% percentile (I thought 760 was high).

Simulation - They use a scale so you kind of have to eyeball the score changes. The affects are cumulative so, for example, a 70% Credit Card Limit Usage would be like -30 points to your credit score.

Credit Card Limit Usage (%):
0-15%: Baseline
16-29%: -3
30-50%: -5
51-64%: -7
65+%: -15

Bankruptcy:
No: Baseline
Yes: -170

Credit Inquiries:
0: Baseline
1-2: -5
3-4: no change
5-6: -5
7+: no change

Delinquent/Past Due Balances:
No: Baseline
Yes: -50

Open Accounts (ie. loans, lines of credit):
0: Baseline
1-2: no change
3-4: -3
5+: -5

Mortgage:
Yes: Baseline
No: -5

Now, take it for what it's worth. I'm just stating the results of the simulation for entertainment purposes only <img src="i/expressions/face-icon-small-tongue.gif" border=0>. This could be way off. For example, I've heard of credit scores getting reduced more than 60 points just by going over 50% utilization (but according to this simulation its only around 8-15 points). And this simulation doesn't account for a whole lot of other factors that would affect your credit score. I'd be happy to update this post with real world verified credit changes from other people's own experiences.



Interesting post.

My score has increased about 20 points over the past week. The only change to my credit has been a fluctuation in reported utilization, which I guess is a result of my paying down my credit cards, as I do each month.

??

You should also check this post or the original source article or the Fair Isaac presentation to the FTC about their (older) scoring model. Fair Isaac offers a newer, heuristic relational model (NextGen) that eschews simple modifiers, but this is expensive and far less commonly used than the simple +/- score modifier.

Repeating the original posting:

Own own home: Worth 25 points
Years In home: 10+ years = 23 points
Occupation: Professional = 50 points
Years on Job: 12+ years = 39 points
Department store card: = 10 points
Major credit card: = 16 points
Both of them: = 27 points
Checking and Savings account: = 20 points

Debt Ratios:
<25% = 22 points
15-25% = 15 points
26-35% = 12 points
36-49% = 5 points
50%+ = 0 points

Number of recent inquiries:
0 = 3 points
1 = 11 points
2 = 3 points
3 = -7 points
4 = -11 points
5-9 = -20 points

Years in bureau files:
<5 = 0 points
1-2 = 5 points
3-4 = 15 points
5-7 = 30 points
8+ = 40 points

Number of Revolving trades outstanding:
0 = 5 points
1-2 = 12 points
3-5 = 8 points
6+ = -4 points

Percent credit line utilization:
0-15% = 15 points
16-30% = 5 points
31-40% = -3 points
41-50% = -10 points
>50% = -18 points

Worse & reference:
Any derog = -29 points
Any slow pay = -14 points
1 satisfactory account = 17 points
2 satisfactory accounts = 24 points
3 satisfactory accounts = 29 points

I was following my scores recently, because I planned on taking advantage of 0%, so I was going to use over 50% utilization on two cards --- my scores dropped by 20 points for each card going over 50% (they were at 0% utilization prior to these transactions). For what it's worth.

[Q]my scores dropped by 20 points for each card going over 50%

Check this link for a graphical display of how utilisation affects FICO. You do need to create a login, but it's a good board and well worth a look.

FICO Score vs. % Utilization - How much does it matter?

What's most interesting is how FICO tweaks the results slightly.

For lower quartile FICO scores, carrying a zero balance costs you points compared to a low (1-2%) util.

For upper quartile FICO scores, carrying a zero balance nets you points.

The implication to draw from this is that the FICO model distrusts low credit scorers with zero balances. It "prefers" them to carry a small balance.

meehawl, what is a "low scorer"?


[Q]meehawl, what is a "low scorer"?

Upper and lower bands of FICO range. Check the referenced link for a visual explanation.

Thanks for your excellent posts on this thread meehawl.

What I don't understand about that chart is how the CRAs could possibly get ahold of much of that info:

Occupation: Professional ?
Years on Job: 12+ years ?
Checking and Savings account: = 20 points ?

They simply don't have the info to make a determination on these factors, and some of the others (like owning ones home or living there 10+ years) would seem problematic for them as well...

meehawl said:
[Q]You should also check this post or the original source article or the Fair Isaac presentation to the FTC about their (older) scoring model.

According to Fair Isaac, the FICO scoring system is proprietary information. So for their presentation, they used a fictional scoring system, not their FICO system. The FICO scoring system does not take into account any information that is not on your credit report, for instance, whether or not you have a checking or savings account.

[Q]Occupation: Professional ?
Years on Job: 12+ years ?
Checking and Savings account: = 20 points ?

They get the employer/status information, I am guessing, from people who kindly supply it on some credit card applications. I'm guessing the banks send on the info. Once they have employer info listed they probably datestamp it then do an age rendering for the FICO based on when it changed last. I've noticed that Equifax has my current employer (from an AMEX app I did last year) whereas TU and Experian have my employer from 3+ years ago. I am torn about whether to write to them change that info considering you must wait 2.5 years for new employer info to age sufficiently before it becomes preferable to a simple listing as "no info".

I note that some (but by far from all) CC apps ask for checking and savings accounts. I'm betting that info gets sent on to the CRAs - it would be expensive for them to continually do CHEX lookups.

As regards whether FICO includes extraneous info not found within the three core CRA files, I'd suggest this info is stored by other CRAs and accessed on-demand, say from Lexis-Nexis or similar non-credit-based databases. They already do lots of this sort of thing for skip tracing and similar. I noticed from a Fair, Isaac presentation to the Senate that they specifically rule out consideration of "a person's income, marital status, ethnic group, religion, nationality, or neighborhood". Everything else is fair game to them. Page 12 explains what they check and do not check. Bank accounts are not listed. I do note that Fair, Isaac also supplies a range of products tailored to specific lenders or banks, and these scores may modify the base FICO or be considered alongside it.

Fair Isaac Presentation to the Senate Committee on Banking, Housing, and Urban Affairs

Check slide #6 for how "behavioral" credit scoring includes a "bank reference"

How Do Different Scoring Models Intersect? See slide #50

Another interesting stemming from the NextGen presentation is that the newer FICO range will be 150-900.

The names of the newer FICO products are:

Equifax - Pinnacle (model #02531) (deprecates Beacon)
TransUnion - PRECISION (algorithm #227) (deprecates Empirica)
Experian - Experian/Fair, Isaac Advanced Risk Score (keyword "RM-M" (deprecates old "Risk Model"

The newer scheme, because it is more relational while still preserving similar a similar spectrum of odds-ralted risk ranking, is fairer to people with newer or more shallow credit files. Fair, Isaac calls these people "young and thing". Under the newer scheme, this population gets spread further along the odds line, so good risks are identified easier than with the older scheme, promoted, and offered credit more easily. It's a more discerning, more fine-grained system, with higher resolution and greater population affinity clustering.

Marketing bumph about NextGen

meehawl,

This is from an article at bankrate. (Quote is from page 2 of the article.)

Page 2 of article:

http://www.bankrate.com/brm/news/credit- scoring/20031104a2.asp


According to Fair Isaac’s consumer affairs manager Craig Watts:

"What doesn't count in a score

The scoring model doesn't look at:

age
race
job or length of employment at your job
income
education
marital status
whether or not you've been turned down for credit
length of time at your current address
whether you own a home or rent

A lender may consider all those factors when deciding whether to approve a loan application, but they aren't part of how a FICO score is calculated, Watts says."


Saw this and thought it was informative. I did not realize that there was a consumer banking report for bank accounts like the credit report.


Article Link

Bank account bonuses
Tuesday August 17, 6:00 am ET
Don Taylor


Dear Dr. Don,
I see so many banks offering anywhere from $25 to $100 for opening a new checking account. This leads me to believe that I can open and close multiple bank accounts and pocket that bonus money. My question is, "Do the banks report the opening and closing of accounts to the government or some other institution and does opening or closing several checking accounts affect an individual in any way?"
-- Kumar Cache
Dear Kumar,
Like credit card holders that hopped from one zero-percent interest offer to another in order to minimize the interest paid on outstanding balances, depositors can look to finesse the financial system to take advantage of sign-up bonuses for checking, savings and brokerage accounts.


The Money Bulletin Board is a Web site dedicated to tracking these offers and providing pointers on how to manage them. Microsoft Money users, for example, can open a new Net Bank account for just $50 and earn a $50 bonus. With any offer, make sure you understand the terms of the offer before opening an account.

Your banking history is tracked on a consumer report just as your credit report shows your credit history. The principal provider of consumer banking reports is ChexSystems. A bank that subscribes to ChexSystems can view your banking history and decide whether it wants you for a customer. You can request a copy of your consumer banking report online.

The consumer banking report is typically used to weed out prospective customers that have a history of writing bad checks, but a person with a history of opening and closing bank accounts isn't a very good prospect either, and the bank could decide that it doesn't want your business.

The bonuses are taxable income and you'll have to declare them on your taxes along with filing all of the 1099-INT forms you receive from the banks.



<<Own own home: Worth 25 points
Years In home: 10+ years = 23 points
Occupation: Professional = 50 points
Years on Job: 12+ years = 39 points
Department store card: = 10 points
Major credit card: = 16 points
Both of them: = 27 points
Checking and Savings account: = 20 points >>

pretty bogus



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