My $262k mortgage just dropped in on Equifax today. ScoreWatch hasn't issued an alert yet, but TrueCredit shows it. When the HELOC showed up on EQ, TC scored it as a 13 point gain. Now the mortgage produced a 14 point loss. EQ is still not reporting the installment loan. The HELOC is 2 months old, the mortgage is 6 months old. TC doesn't show the month-by-month reporting for EQ though. TU and EX posted gains when the HELOC and installment loan hit. It will be interesting to see what the mortgage does.
My Crown Jeweler card showed up on my Equifax report and my score dropped 13 points... Then it shows up on my Experian report and that score jumps 21 points... possibly more since I just got an inquiry on the Experian report. I'm loving my Experian report now and I'm hating my Equifax.
For those using TrueCredit: I dropped one inquiry from both TU and EQ. All other things remained the same from one day to the next. TU went from 4 to 3, and my FAKO score increased by 4 points - from 679 to 683. EQ went from 8 to 7 and my FAKO score only increased by 1 point - from 642 to 643. Apparently, the fewer inquiries you have, the greater impact a single additional one will have. After you get to 7+, it seems like subsequent ones hardly matter at all.
Dropping into another Peer Group In working with Equifax to clean some things up, they managed to drop reporting of my judgment completely about a month ago, and just changed my foreclosure to "OK", but still with the lates reporting. My FICO has dropped from a 689 to a 663. Now, this is in part due to new accounts that have been opened - TU has taken a bit of a drop too. However, I theorize that the dramatic drop may be due in part to a change in "Peer Group" (for lack of an 'official' term). Formerly, I was scored with those who had Foreclosures, or judgments, or both. Now, with Equifax, I'm scored with those who have neither. The remaining marks on my credit now stand out a great deal more. To offset this, Experian is the harshest to deal with. They are still showing the F/C, the judgment, and twice as many inquiries as EQ and TU. They're reporting just as many new accounts as EQ and TU, but in the last 4 times I've pulled myFICO, EX's score has only changed by one point - from 692 to 693! I would think that may be a demonstration of the effect of different segments in scoring. For the most part, I've got all three bureaus reporting the same accounts with just a couple of strays on one or the other. In fact, EQ is only reporting 2 collection accounts while EX is reporting 4 collections plus the judgment, foreclosure, and twice as many inquiries. They're all reporting exactly the same positive accounts. And Experian's FICO score is 30 points higher than EQ? It seems the different buckets are the only plausible explanation.
The more scenarios I see, and how they effect the FICO scores and model, I am beginning to think there is more to its calculation than we "see" on our reports. Reveiwing the CDIA Manual, and the "coding" procedures, I am theorizing this is where the "true" scoring comes in; that the FICO model uses only the "codes" to calculate. The hard part is that we are "blind" to the actual code used, we can see the TL, and even reference the CDIA Manual to know how it "should be" coded, but we are blind to what is the actual code going into the scoring model. What is also very interesting has been the discussion of the "new" FICO model to deal with the "purchased AU" items. FICO has said that they will pilot a model with "one" of the CRAs. To me, this means that there already exists different scoring models between the CRAs, so identical reports do not mean identical FICO scores. My other guess at the FICO model says that even negative accounts count for scoring in a positive way. I think the model counts the "good history" of a negative account somehow, along with the aging factor. I keep reading over and over the "factors and weighting" that FICO publishes, and I am now starting to read into what they "don't" say. There are too many examples of scores dropping upon removal of negative tradelines to say it is only aging, and this "aging factor" does not balance out with their published "weight" of the data. The recent examples of the effect of purchase "AU" accounts starts to bear this out. Regarding the "grouping" effect, I beleive the FICO model has a fault in this categorizing as well. Most likely the formula has an "integrity" function. This is similar to personality and appitude tests, where the test is also calculating your attempt to "out psych" the test. The other factor we often overlook is what is happening in the "market"; with mortgage defaults increasing, the FICO model is trying to align data with actual default rates, and generate probabilities of default. I think "subgroups" are being skewed right now, due to external data for defaults. But, I hope everyone keeps providing the examples, it is valuable insight into how the model works (and does not!).
Valid point! It would seem that the model is constantly 'learning'. We can't always see it happening because even if we have absolutely no other activity on our files, they are aging - which creates some score change. Speaking of change - I was able to get Equifax to drop 4 inquiries. I went down from 7 to 3. I know from before that moving from 6 inquiries to 7 (all other things being equal), my score dropped 2 points. We could then assume that perhaps when I dropped from 7 to 6, my score would improve by 2 points (all other things being equal). In this case, my TrueCredit score improved by 8 points (665 to 673). That would mean that each inquiry from 4 to 7 impacted my score by 2 points. (Keep in mind this is TC). I haven't gotten a ScoreWatch alert yet to see what affect it may (or may not) have had on my real FICO. Summation: I have a theory. Perhaps it's only the first couple of inquiries that really bang you bad. After you have 3, maybe it only hits you a couple of points each. Then, after 7 or 8, they don't drop your score at all. Not that you want to go out and rack up inquiries, but maybe you don't have to avoid them like the plague if you can use the extra credit...
-------------------------------------------------------------------------------- I had 41 hard inquiries on my equifax report. I used this method posted by Collectman, I now have 0 (zero) inquireis..all in a 1 month time frame....AND my equifax score went up 50 points Btw, here's the link to do this: https://www.econsumer.equifax.com/co...online_dispute If you enter your zip code and click on next, a link towards the top will say, if you dont have a confirmation/report number, click here. Click on that link fill out all the personal information and then instead of creditor name, put in the inquiry name, for account number put down the inquiry date, and reason, not mine. I have used this on a couple car loan inquiries and they were removed in a few days.
Was that the only thing that changed within the month? I guess 41 is a lot of inquiries, but I've had numbers in the teens and deleting them didn't change anything. It seems my score only changes when I add or delete inquiries in the range of 0-10 or 12. Of course, I've never had more than 16 so I can't speak to larger numbers like yours.
Interesting conversation with my banker.. I just came from a meeting with my banker; we ended with a casual conversation regarding FICO scores, and lender reviews of loan application processes. Per my banker, having "too many" credit cards (more than 3) starts to LOWER your FICO score. Yes, I argued the (published) FICO formula, and that caused a wry smile for my banker. My banker noted that yes this is published, but as you acquire more credit cards, and track closely you will see a lowering in your score. We also discussed "available credit", and how a bank views it (again, for lending review). They look at "available credit" as pure debt in their reviews. All that matters is that you "could" use it, and rack up the debt. So, in their debt to income calculations, "available is counted as debt".......... Again I argued the FICO score published "utilization" factor, and was met with another smile! We discussed that there are differences in credit/loan types, and different credit issuers use different criteria, but a "traditional" bank will review a loan application this way. I found it interesting, and a bit insightful, for what it's worth.
That may account for the difficulty one has in obtaining loans from regular banks. They only want to lend to my grandpa who's only had 2 credit cards in his life (and those for the last 30 years), saved up and paid cash for his house that he bought in 1949, and may not even be aware that he has a spotless credit report (or even what that is). The rest of us have to go to non-traditional sources. I wonder how much of a hit you take with each additional card. Any idea if the negative impact caps out sort of like inquiries do? I've got a foreclosure (4 yrs old), a judgement (6 yrs old), and a handful of collections - one of which is still reporting unpaid - on my report which already give me black marks. In addition, I've got 15 credit cards, 5 of which are store cards. My last FICOs were 695, 693, and 675 and I'm pretty sure those were lower because of utilization on my HELOC which is regarded as a revolving line and thrown in with credit cards. In my case, the number of cards can't be hurting me too bad as I think they're decent scores given all the other problems.
What I could not get out of my banker (fully) was THEIR FICO model, remember each industry has a tailored FICO model (which as consumers we do not see!). We did speak about "store cards", and the issuers actually have a "bank charter" to issue these cards under, and that they use a different criteria for acceptance than a "traditional" bank. It is intuitive that your FICO score should decrease with a high number of CCs, and available credit. The FICO model "says" no, but....the "score" is a predictive probability of default, and a lot of available credit should increase a potential "probability". So, in brief, I think FICO's model does discount too many CCs at some point. I do not (fully) believe the published "formula". I also have come to believe that the consumer FICO score (the ones we purchase) are not completely in line with the models actual lenders purchase and use. Just my "guess", any more than 4 traditional CCs (Visa, MC, AmEx, Discover, etc.) begins to impact your score. I would guess about the same amount for "store" cards as well. Again just a SWAG......
I think that the consumer FICO score falls more in line with the mortgage-oriented FICO model. As we know, there are variations for different industries, but I've had my score pulled 4 times for mortgage loans and each time their scores matched the FICO scores I had exactly. I haven't done any auto loans, or other types - which I'm sure are different, but I can vouch for the mortgage products so far. As far as credit card accounts, it would be interesting to know just how much they do affect your score. In my experience inquiries hurt your score at a decreasing rate and almost none after you've got 7 or so. It's hard to gauge by my scores because I think my low average age is far more detrimental than the number of cards and even that is overshadowed by the actual derogatory items still present. As I recall, the guy that had the 830 (or so) score only had 2 credit cards that he'd had open for umpteen years, so maybe that was part of his secret. I, on the other hand, intend to use my credit (for good and not for evil), so a 720 will be just fine with me.
I remember that a few years back, FICO was "looking for anyone with a "perfect (850) score. (Again, I can'tunderstand how they couldn't find it themselves!). But they were looking for the 850s to examine the makeup and mix. As I recal there were only a few 830+ scores out there, and no one came forth with an 850. But, those with these hihg FICOs did only have a couple of cards, no one had several. They all had very seasoned mortgages, and the CC cards were all well over twenty years aged. My simple guess is that over 5 or 6 cards starts to pull you down, and this is also dependent upon the total of the credit limits as well, I'm sure. Common sense would say that there is a point where "management" of a lot of CCs does become an issue, incresing the probability of an "oops".
What would be your suggestion to those with a lot of credit cards? If they're under 700, should they start to cull out accounts? We're always told never to close accounts as they lower age, but in this case maybe it's necessary for the long range picture? Sometimes a card isn't useful to you anymore because of its low limit or adverse rates and fees. When closing a card you have the negative of a drop in your available credit thus affecting utilization - although this would be minimal with a small card. You also have the eventual negative of your account age being affected when it finally drops off your report. This might also be minimal when you consider that 'good' accounts hang on your report longer than bad ones. Perhaps it's a strategic consideration to selectively drop the least favorable cards in the stack. On the other hand, if you've got a 720+ and 100 cards, who cares?
I have a handful of crap cards right now that I plan on dropping as soon as I close on my house. And then I plan to replace with less "better" cards with higher limits. It'll probably still take me another year or so to qualify for the "premium" cards, but I intend to lose the "better" cards when I get the premiums and then let everything age...
Remember, credit is a financial tool, to make your life better. Always do what makes the most sense for your situation. You also have to look at what range you're in on the FICO scoring model. There are the "default" categories, and if you can stay within a category, and save yourself some money and convenience, then close accounts and save money! Another item in the FICO scoring model, is the "positive" effect of better cards. You will see this sometimes on your score explanantion; that the presence of a premier, or nationally recognized card, reflects favorably on your creditworthiness. In the end, make credit work for you, do not be a slave to your FICO score.
Sound advice as always Biz. My point was, once I close on my mortgage, I have no immediate need for credit. At that point, I'm willing to take a hit by closing some accounts to upgrade to less, but better, accounts. So I'll take a hit for age, but in the long run, if I want to get to the 800 range, seems the best way is to have that 5+ year old CC or 2, a good standing mortagage, and 1-2 good standing car loans (one paid, one current). I figure going this route, I can have my score to 750-775 in 2 years, refi the mortgage with the much better scores. Beyond that, other than cars, I'm hoping my need for credit will be slight. I've already changed my habits regarding the use of revolving accounts. They're really just used as a sort of payday loan right now. Anything that I KNOW I'll be buying with cash in the next 2-4 weeks, I may speed up the timeline using credit, but otherwise, it's become more of a convenience item for me now. Use the card so I don't have to worry about cash and ATM fees, pay all or nearly so by the time payment's due. Incidentally, back to the title of the thread, here's some data on what the passage of time can do. Check my FAKO's for 7/2 and 8/1. There has been NO CHANGE in the actual reports between the two dates. I think the biggest factor is the stupid 30 day late(was 32 days late actually) on my Cap1 became 6 months old...
Sounds like you have a good plan, and you're doing all the right things. Most importantly, you've developed the "good habits", which are the true way to get that high FICO score!
That banker might be right when he says that more than 3 credit cards in your port might do more harm than good. This is from my experience only and the scoring results might be a bit skewed because I severely reduced my utilization at the same time I got more available credit. Since all three FICO scores were nearly identical I'll just use my Transunion score as an example. TU 682 with $12000 available credit spread over one $5K CC and two store cards with a total of $7K. Utilization was 56%. My score jumped to 714 TU (FICO) after I reduced my utilization down to 16% and added two credit cards. One for $15K the other for $7500. How much is attributable to the reduced utilization and how much to adding two cards? I dunno. As an aside my inquiries went from 5 to 7. The 5 inquiries were all from car shopping last December. Since adding another $60K availavle credit spread over 4 more cards and dropping my inquiries down to 0 (thanks TC) my score has dropped to TU 698. My utilization is now under 1% and will remain there. I will be interested to see if my Equifax score jumps a bit once the full effects of the dropping of authorized users makes it's way into the Equifax scoring this Fall.
I had a vacated judgment taken off my Equifax report and didn't gain one measly point. Still, it's a victory.
