Rescoring Info

ok, I met with a guy who does rescoring successfully. you guys wanted to know what he told me. I'll tell you, and you can discuss it as you like. I'm taking it at face value.

For what it's worth, here it is:

Look at a mortgage report (tri-merge) and compare it to your consumer reports. Generally there are differences that are hurting you that you may not see on your reports. I am certainly proof of that. You must have a true idea of what your lenders are seeing.

Be careful of Experian. Their coding is off and they don't always correct tradelines (from neg to pos). even if you think things are fine.. they may still show as derog to lenders.

Accounts are not all alike:there are tiers

Tier1: accounts tied to deposit banks
these generate the most bang for the scoring buck.
Think banks. AMEX, Bank of America, Citibank, Chase, FirstUnion. you get the idea.
Tier2: accounts not tied to deposit banks but are not finance companies (or affiliated with finance companies)
FirstUSA, Cap1, Providian
Tier3: accounts tied to finance companies. these will actually decrease your score as compared to Tier 1&2
Fleet, Household (b/c of HFC), American General, etc.

To max your score keep to 2-3 revolving accounts from Tier 1 and 1-2 installment accounts from Tier 1 banks (open accounts). Work up to tier 1 accounts. Cancel tier 3. not worth it. not really helping you. Tier 2 is up to you. Try to trade up but don't cancel your oldest card if it's a tier 2 (you need the age too).

Accounts increase in points in increments:
12 mos
24 mos Big jump in points
36 mos. At 36 you've gotten the max points from an account.

You take a hit for 6 mos on a new account.

once you close an account you keep a positive effect for 36 months maximum post closing. then it's neutral.

For mortgage models: inquiries after 90 days have regained most points lost. individual credit card companies may have differing models regarding inquiries' maximums for computer approval (eg: Amex).

Ratios are THE scoring factor (assuming no huge derogs). Revolving ratios that are high hurt big. installments ratios in comparison are nada. They don't want to see high credit card RATIOs. Pay them down or increase your limits. under 25% is ok. He thinks it goes in 10% increments (but this is more a guess). He was certain high ratios kill scores if it's on revolving debt.

Watch the last date of activity (DLA). The last 12 mos count most (good or bad) for scoring and most companies count the last 24 mos heaviest.

So, if an old account that used to hurt you has aged... but they do something to change your DLA to this month... your score is going to take a hit. (I know, we think if the derog happened in 1998 and it's been good since we're ok). He said the DLA is the determining factor for a score from a tradeline.

Eg: If the account has been perfect but it's DLA was 4 years ago... it's neutral to your score. Have something happen to the account, change the DLA to now, and boom score boost. that's why we're supposed to use the good cards, the model needs recent activity.

He believes prm inquiries do hurt scores. Opt out. Do the 2 year deal at 888-5opt out. He's not sure if there's more boost with the permanent opt out. He's only tested the 2 year deal.

Now, a quicker strategy to more points is as follows. IF your score in in the low 600s to mid 600s now (NOT under 600)... To do a 90+ 120 day score boost he recommends the following (esp if you're getting a mortgage or wanting to go prime):

1. 2 year promo opt out. confirm promo.
2. Pick your older/better 2-3 cards, cancel all the rest. all. confirm cancellation is reporting on your reports. Have 1-2 installments open.
3. Do not apply for a thing.
4. Correct any errors you can but only if it won't generate any merchant inquiries.

Wait for your score to rebound.
If your score is under 600 he said it doesn't work as much (the models are likely tiered based on where we currently are)?.. who knows. This is experiential information.

Ok, some of this is a bit more radical. I'm cringing at the thought of losing 6 cards but it's put a bee in my bonnet to get them combined sooner. I guess you need to Know your goal and act accordingly.

On my score "account aging" is an issue. If I close the last 6 and keep my oldest 3 I go from 13 mos age to 23 mos age. Next month that code could drop from my model if I only had those older 3 cards.

Now, also when you do this assume no huge balances. Take out an installment debt consolidation if you have to with your bank and pay off the credit cards!!! If you cancel the new but keep huge ratios on the remaining 2-3 cards the ratio could outdo the other boost.

So paydown to under 25%, cancel down to 3 cards, 1-2 installments... and get out of those extra inquiries and he was guessing I'd jump from mid 600s to over 700. That's prime. Even if it took 6-9 mos for the score to increase it'd be worth it.

Now, I have a bk so some prime cards won't touch me yet so I'm more timing sensitive. I don't want to shut down most of my credit if I'm not getting a mortgage for 2 years or if prime cards won't touch me for another 2 years or so (5 years post bk). I can do the more radical stuff in a year and a half.

Anyway, these are the suggestions I got.
Most of us are too revolving heavy to max the model. His idea is that if you've been building / rebuilding and you boost your score, you can then go out and get that mortgage or more Prime cards with higher limits per card.

I think that's it. Do what you want with the info

Subject: the Fair Credit Reporting Act is neither Fair nor Acting like much. Talk amongst yourselves.

 

that's my personal timeline. I have a friend in Bank of America who's a vp... will pull strings if my fico is prime and bk is over 5 years...

I've been a Nationsbank then BofA cusomer for 10 years or so and I used to date his roommate

I have been told that First Union will manually consider after 5 years...

Suntrust and Southtrust here in Atlanta are a bit more friendly to bks if the score is prime.

I'm doing a worst case scenario here. My next move is against the CRAs. If everything works out well, I'm going to try and parole myself out of bk hell sooner than later. But I never count my chickens before they hatch

I negotiate for a living. I've got 10 years under my belt. I approach this whole thing expecting to get a no from a bank. I ask beforehand "if I get declined by your computer can someone override it? if so, who and under what circumstances?"

If my bk continues to show, I can bet you I'll go prime by negotiation and not by computer approval.

If you call around for installment loans from banks you'll get their criteria.

Some say no with a bk. period.

some say yes but after x timeperiod and with reestablished credit.

some go only by score and bk isn't an issue (but they're mostly credit unions that don't report to all 3).

credit cards will be the same way.

You know, I didn't think to ask if credit unions count as tier1, but I am guessing they do.