FICO Effects Spreadsheet

[BobWang]

I have a few cards with balances on them and wanted to pay them off now. I was thinking of using one of my cards with the lowest interest rate to pay off the rest of my CC. So instead of having balances on four or five cards, have just one balance on one card which would put me at around 50% utilization on that card. Would that improve my FICO score having 1 card at a high utilization then having balances on 5 cards?

Roughly speaking, having 5 cards at 10% utilization will cost ~25 points.

 

Having 1 card at 50% will cost ~50 points.

 

But you should play around with the FICO Estimator to get an idea of your specific situation

 

 

[A1Locksmith]

Seems like the credit score rules always change and nobody understands them. It would be nice to see a new system that is a little more logical.

[Needahome1]

When it ask have you ever had a late payment do you select yes even if its not on your report anymore?

[BobWang]

When it ask have you ever had a late payment do you select yes even if its not on your report anymore?

Answer according to what is actually on your credit report.

 

Keep in mind that the original creditor still has that late payment in their internal records.

[Occam]

Bob, just wondering how you managed to attach that xls file. Someone asked me to post a spreadsheet a few days ago and I couldn't find a way to do it. FAQ was NOT helpful.

[BobWang]

Bob, just wondering how you managed to attach that xls file. Someone asked me to post a spreadsheet a few days ago and I couldn't find a way to do it. FAQ was NOT helpful.

You have to ask Mom for permission.

 

Then send it to her, and she'll let you post a link to it.

[BobWang]

I've never seen this topic mentioned anywhere before. I got the following notice when I bought State Farm renter's insurance.

 

"The ratio of the age of the oldest bank revolving account to the age of the oldest account of any type is one of many pieces of information that was used to help determine your premium. Examples of typical bank revolving accounts are Visa and MasterCard credit card accounts. All other things being equal, consumers whose first credit experience is from bank revolving accounts have fewer insurance losses. Consequently, being selective with the type of credit company with which you establish credit many help improve this aspect of your score."

 

My oldest account is a credit card, and it shows on the report they pulled (EX), but it is IIB. Therefore, I assume that they only look at accounts that are still open (or at least not IIB). My oldest account that is still open is an overdraft line of credit that survived my BK, and it is reported as an installment account. Everything else that is still open was opened after BK.

 

So, if you are starting out or restarting, pick a credit card first if you possibly can, otherwise your insurance rates may be higher!

[BobWang]

[BobWang]

 

The counter-intuitive result of there being LESS of a drop for going from 0 to 6 accounts instead of to 3-5,

 

is that there's a FICO boost for having more than 5 accounts.

[nemo]

I'm confused looking at that last graph. What is it that distinguishes the top three lines from the bottom three lines?

[BobWang]

I'm confused looking at that last graph. What is it that distinguishes the top three lines from the bottom three lines?

All are profiles with no negative items.

 

Top three series are for thick profiles with existing accounts.

 

Bottom 3 are for starting out with no existing accounts.

[nemo]

All are profiles with no negative items.

 

Top three series are for thick profiles with existing accounts.

 

Bottom 3 are for starting out with no existing accounts.

 

Oh, I see. The number of credit cards listed for each scenario is the delta. I was misreading it as the total number of cards on the credit report.

 

Thanks for all the great data!

[BobWang]

[BobWang]

[BobWang]

 

 

 

I'm glad I ran the numbers on this, because I found something very interesting.

 

For the best profiles, maxing out leads to a drop from 805 to 695 = 110 points

For middling profiles, maxing out drops from 675 to 555 = 120 points

For worst profiles, maxing out only costs 560 to 500 = 60 points.

 

So, maxing out with middling FICO scores costs twice as much as for worst profiles.

AND costs more than those with FICO scores 125 points higher to begin with.

[Kim2012]

Thanks for posting this. So, does your score go up as balances are paid down? I had 2 low limit store cards that I use and pay off every month, report with maxed out balances. My score tanked (with a few other issues to correct that I was unaware of). I have since paid the cards off and transfered balances to a higher limit credit card that should improve the utilization ratio. Do you think I'll see a difference in my scores once the new balances report.

 

Old:

2 store cards with 80% and 100% utilization

1 Visa with 100% utilization

 

New will reflect:

2 store cards paid off 0 utilization

1 visa with 30% utilization

1 discover with 40% utilization

 

Thanks for any input!

edited to add: These are not new accounts (all 4-8 years old, and I would say an otherwise good credit report, lots of accounts closed, with no lates and 4-6 open CC with zero balances as well as paid off auto loans, etc.

 

 

 

 

 

 

 

 

I'm glad I ran the numbers on this, because I found something very interesting.

 

For the best profiles, maxing out leads to a drop from 805 to 695 = 110 points

For middling profiles, maxing out drops from 675 to 555 = 120 points

For worst profiles, maxing out only costs 560 to 500 = 60 points.

 

So, maxing out with middling FICO scores costs twice as much as for worst profiles.

AND costs more than those with FICO scores 125 points higher to begin with.

Edited January 20, 2013 by Kim2012

[BobWang]

There is the issue of segmentation, or buckets.

 

*IF* you were not put into a different bucket for scoring purposes, your score should recover once the payments are reported.

 

*IF* you get re-bucketed, as I did, it may take a few months to be put back into the original bucket.

[Kim2012]

What do you mean by segmentation? Without being too specific, my score went from 780's to low 600's. Part of that was 2 lates in the past 6 months (paid off CC where interest was charged and I didn't realize it --$5.79 on one and --$70.00 on the other). One of them I have had removed, the other is fighting me on it. I'm wondering which affects my score more -- the lates within the past 6 months or the utilization?

 

Side note - Over the past year we paid off all our CC, auto loans following Dave Ramsey. The only reason I am carrying a balance on this CC is because we are saving cash for a down payment. Discovered these credit issues after applying for mortgage loan. Blindsided with these issues, I didn't know my credit report had changed so much over the past 6 months. Is it possible I have been labeled now, and it will take longer to recover?

 

Thanks for any information.

 

There is the issue of segmentation, or buckets.

 

*IF* you were not put into a different bucket for scoring purposes, your score should recover once the payments are reported.

 

*IF* you get re-bucketed, as I did, it may take a few months to be put back into the original bucket.

[Kim2012]

One more question - where is the estimator? I downloaded the spreadsheet with all the graphs and tried substituting my information, but didn't see any changes on the graph. This could be operator error, mine. I am not an expert in excel. Thank you!

 

What do you mean by segmentation? Without being too specific, my score went from 780's to low 600's. Part of that was 2 lates in the past 6 months (paid off CC where interest was charged and I didn't realize it --$5.79 on one and --$70.00 on the other). One of them I have had removed, the other is fighting me on it. I'm wondering which affects my score more -- the lates within the past 6 months or the utilization?

 

Side note - Over the past year we paid off all our CC, auto loans following Dave Ramsey. The only reason I am carrying a balance on this CC is because we are saving cash for a down payment. Discovered these credit issues after applying for mortgage loan. Blindsided with these issues, I didn't know my credit report had changed so much over the past 6 months. Is it possible I have been labeled now, and it will take longer to recover?

 

Thanks for any information.

 

There is the issue of segmentation, or buckets.

 

*IF* you were not put into a different bucket for scoring purposes, your score should recover once the payments are reported.

 

*IF* you get re-bucketed, as I did, it may take a few months to be put back into the original bucket.

[BobWang]

The Estimators are in the first post of this thread.

 

I haven't posted Version 2 of the spreadsheet yet, which includes the new utilization sheet & chart.

 

I'll send it to Mom, and it should be available later today.

 

Segmentation just means that people are compared to others in similar credit "risk" categories.

[breeze]

Here it is!

 

FICO Score Effects v2.xls

[BobWang]

Thanks, Mom!

[BobWang]

 

 

 

I'm glad I ran the numbers on this, because I found something very interesting.

 

For the best profiles, maxing out leads to a drop from 805 to 695 = 110 points

For middling profiles, maxing out drops from 675 to 555 = 120 points

For worst profiles, maxing out only costs 560 to 500 = 60 points.

 

So, maxing out with middling FICO scores costs twice as much as for worst profiles.

AND costs more than those with FICO scores 125 points higher to begin with.

 

Sparky had a good question about total number or cards in these profiles, it's actually undetermined.

 

However, another thing to notice is that the hit for having more cards with balances increases with worse profiles.

[kls0654]

Is there any instructions how to use this file ?

 

I open the file but I can not see a way how to start putting information in it

 

if you can point me to a link or help file , please do so

 

Any help wold me be much appropriated

[BobWang]

I'm afraid you have to know how to use a spreadsheet in order to change the info on the charts.

 

In general terms, go to the FICO Estimator sites, input your own information, then input into the cells on the same worksheet as the chart.

 

The chart will refresh automatically, but if your data falls outside the ranges I used, you'll need to re-format the axes to reflect the new ranges.

 

It's not rocket science, more like bottle rockets.