How will new scoring affect seasoned Tradelines?

Long, and somewhat contentious, thread, here, that discussed that topic.

http://consumers.creditnet.com/Discussions/credit-talk/t-fico-changes-coming-67120.html

Draw your own conclusions as to what makes sense and what doesn't.

One thing did come through in the thread, though, is that it is too early to tell exactly what is going to happen and how it will affect and individual's score.

 

As Oracle stated, read the thread he cites too.

While we differ, my opinion is that this new model will never see the light of day insofar as it is too risky for anyone to use. Doesn't really make sense to do so. Assuming arguendo that it does go into effect, the question then becomes who would use it. Thereafter if anyone does use it, you will see litigation. I think the aforesaid litigation takes FICO 08' out of the picture assuming that it ever comes into focus which, again, I don't think is plausible.

Again, this is all my opinion.

As that applies to you, I think you would be safe making such a purchase even if FICO 08' came into light. It likely would not be effective by the time you made your purchase and even if it were, most lenders use Auto Enhanced scores and therefore, the whole FICO 08' issue would be inapplicable.

 

I would concur.

I would also go as far as to say an overwhelming majority will see relatively little change in their FICO scores and how banks go about granting credit if and when FICO-08 comes to pass.

The true impact will be to those on the margins.

 

There are a lot of scoring models. I know when I applied for my auto loan, they told me my credit score was 300-something (I don't remember exactly, but it was in the 300s). When I said I didn't see how that was possible, I was told that they use a risk model, and a low score is better, so my score was very good.

That's why you shouldn't just look at your FICO score and decide that it's high enough. Might not even be the right scoring model.

 

Yes, adding avaliable credit via some aged lines would improve your overall utilization. General rule in cases such as yours is that if you can get it to 35% or lower overall, you can get about 75 to 90 points.

No, FICO 08' is non-existant at this time. Don't let anyone tell you otherwise.

The Yahoo story you referenced is a mere regurgitation of everything that has already been spewed across the media. However, it is more ambigious than most I've seen. Seems indicative of the opinion we hold that FICO 08' is merely a feel good measure for mortgage lenders and a means to scare people so that their scores will continue to suffer.

 

For your situation, it appears to make sense to purchase a seasoned tradeline to boost your reports and scores. You are very clear on what you want the tradeline to do, so it does makes sense.

As for the impact (or lack of) due to the new FICO '08 model, the above posts are correct. The largest detail is that it is not in effect right now, so a decison to purchase or not, should be made on the fact that it is not in effect. It is a very, very low risk that the tradeline you purchase will not help you.

Base your decision whether to purchase based upon the facts as they are today. In the very worst case scenario, I am certain you will make your purchase before any new FICO model impacts you.

 

While I understand where bizwiz is coming from, I think it important to offer the following:

The purchase of a seasoned trade line needs to be measured in economic terms, not in terms of FICO scores. $1000 spent on a seasoned trade line to save $500 in interest over time may not make economic sense.

After all, we are talking about business transactions here.

 

I agree about the net economic benefit of purchasing a seasoned tradeline, and the poster must consider this transaction, as well as any near future (credit) transaction.

To fully analyze, any prospective tradeline buyer needs to consider the psychological/emotional benefits of having a higher credit score. I feel many people purchase a tradeline for this "soft" benefit as well.

 

Feel-good reasoning to do things of an economic nature does not necessarily equate to good business practice.

But you are right, the feel-good factor is there, especially in our economy. Just read, listen to, and watch all of the advertisements that bombard us day-in and day-out. They are selling the product by selling the emotion of ownership. And it works. That's why we keep seeing the feel-good ads.

I have never understood why people will buy something to feel good in a high-end retail situation when they could go next door and get the exact same item for half the price.

If the OP were to take the $1000 for the trade line, which is essentially money spent on an intangible, and put it towards the down payment on the new auto, the OP may find that he comes out ahead of the game financially.

Having more money in my pocket to spend as I see fit seems at least equal to the feel-good nature of the intangible.

 

However, this area of choice is the basis of a free market economy. In economics the "perceived value" is often more critical than the intrinsic value.

My point is that this proposed purchase is an individual decision. All the benefits and costs should be looked at, both tangible and intangible.

Yes, we are bombarded every moment with appeals to our emotional purchasing condition, it is up to each individual as to how to respond, and decide what is best for them. In this case, perhaps the OP places a "high cost" on that moment of anxiety while the credit report is being pulled and processed. If the "bottom line" is all that matters, then perhaps applying the tradeline cost to the automobile purchase makes more sense.

I urge the OP to consider all factors, and decide what is best for him.

 

This is always sage advice.

I do disagree, however, that the "I want" should be transcendent over the "I need".

 

Your last sentence is why we are in the mortgage crisis we are in and why it is only getting worse . . .

 

Excellent point.

 

FYI - Auto Enhanced scores tend to weight your installment type loans, and previous (if any) auto loans much more heavily than a standard FICO.

 

The bounce you might see is somewhat dependent on the reasons that are keeping your score in the 630 range that it is now. Likely age and usage. While a seasoned trade line would improve the look and feel of both, I doubt that, short term, you would see the 100+ point increase that you might need for the economic trade to be to advantage. If you were looking longer term, more like 12 months +, you might see such a gain, but other factors would be coming into play in the equation, too.

One big unknown is where the consumer credit markets are heading at this point, and what interest rates might do, both short and medium term.

 

Totally depends on what is reflected on your reports. That is to say, what is the oldest account (can it be feasibly doubled or amplified beyond a marginal extent), what is your payment history (you have age but, it is comprised of now closed accounts and thus, there is a lack of protracted payment history), and what is your utilization like (we have an idea about this).

Speaking in generalities, if one can substantially increase their overall history and add enough avaliable credit to reduce their utilization to 30% or less then 80 to 100 points is attainable. Of course, the higher your scores the less increase you may see.

In terms of what to expect per addition: adding something with ten years is typically worth 60 points, adding something with two years is worth about 20 to 25. Now, this is presented in general.

It is always best to evaluate the reports to see what is needed.

 

At this point I would recommend that you contact Apex's company to get more of the facts re: a pruchased tradeline and its impact on your FICO score. Apex's company will be able to review your report and give you a better idea of the effect, and costs for a purchased tradeline.

Review all the facts, and decide what is best for you. But I think you're ready to speak to someone regarding this move.

Good Luck...