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Bouncing back from bad credit takes time


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I'm lovin the pie chart with only 5 factors in a fico score. If it were only that simple. Utilization and inquires are among the most obvious factors omitted. Fico will never reveal it's complete algorithm. They wouldn't make any more money if they did. Overall half-arsed artlcle.

Inquiries are part of new credit, and utilization maps to amount owed in that pie chart.

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I'm lovin the pie chart with only 5 factors in a fico score. If it were only that simple. Utilization and inquires are among the most obvious factors omitted. Fico will never reveal it's complete algorithm. They wouldn't make any more money if they did. Overall half-arsed artlcle.

Inquiries are part of new credit, and utilization maps to amount owed in that pie chart.

 

 

ok, but just because you receive an inquiry doesn't mean you're getting a new credit account. And you can have 50k in reported revolving debt and only be at 20% utilization if you have 250k in lines. It's too generalized IMO, but I get it. But there needed to be a disclaimer that there are more factors. Theres also other things like number of accounts with a balance, etc. Length of credit history and average age of accounts are counted as two separate factors in fico but I guess it could be generalized under "length of credit history" in that pie chart.

Edited by TheChosenOne
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I'm lovin the pie chart with only 5 factors in a fico score. If it were only that simple. Utilization and inquires are among the most obvious factors omitted. Fico will never reveal it's complete algorithm. They wouldn't make any more money if they did. Overall half-arsed artlcle.

 

Inquiries are part of new credit, and utilization maps to amount owed in that pie chart.

ok, but just because you receive an inquiry doesn't mean you're getting a new credit account. And you can have 50k in reported revolving debt and only be at 20% utilization if you have 250k in lines. It's too generalized IMO, but I get it. But there needed to be a disclaimer that there are more factors. Theres also other things like number of accounts with a balance, etc.

Inquiries are as good as meaningless for FICO scoring.

 

These explanations are always dumbed down for the least sophisticated consumer.

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I'm lovin the pie chart with only 5 factors in a fico score. If it were only that simple. Utilization and inquires are among the most obvious factors omitted. Fico will never reveal it's complete algorithm. They wouldn't make any more money if they did. Overall half-arsed artlcle.

Inquiries are part of new credit, and utilization maps to amount owed in that pie chart.

ok, but just because you receive an inquiry doesn't mean you're getting a new credit account. And you can have 50k in reported revolving debt and only be at 20% utilization if you have 250k in lines. It's too generalized IMO, but I get it. But there needed to be a disclaimer that there are more factors. Theres also other things like number of accounts with a balance, etc.

Inquiries are as good as meaningless for FICO scoring.

 

These explanations are always dumbed down for the least sophisticated consumer.

 

 

Yeah. You can't educate consumers that way though. I'm interested in why inquiries are meaningless. Back when I was applying for credit every few months I would notice an inquiry would take down my score before the new accts even reported. About 4-7 pts each. Is that not the case anymore?

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I'm lovin the pie chart with only 5 factors in a fico score. If it were only that simple. Utilization and inquires are among the most obvious factors omitted. Fico will never reveal it's complete algorithm. They wouldn't make any more money if they did. Overall half-arsed artlcle.

 

Inquiries are part of new credit, and utilization maps to amount owed in that pie chart.

ok, but just because you receive an inquiry doesn't mean you're getting a new credit account. And you can have 50k in reported revolving debt and only be at 20% utilization if you have 250k in lines. It's too generalized IMO, but I get it. But there needed to be a disclaimer that there are more factors. Theres also other things like number of accounts with a balance, etc.

Inquiries are as good as meaningless for FICO scoring.

These explanations are always dumbed down for the least sophisticated consumer.

Yeah. You can't educate consumers that way though. I'm interested in why inquiries are meaningless. Back when I was applying for credit every few months I would notice an inquiry would take down my score before the new accts even reported. About 4-7 pts each. Is that not the case anymore?

For FICO 8 an inquiry older than 12 months is ignored, as well as inquiries over 6.

 

It's not as simple as saying that one inquiry = X points. I have had 850s with inquiries on every bureau.

 

Sometimes an inquiry will cost you a couple of points, but out of 550 points in the FICO 08 range, 3-4 points is less than 0.5% of all points available.

 

You will not see a drop with each and every inquiry, and when you do see a drop it's a meaningless amount.

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I'm lovin the pie chart with only 5 factors in a fico score. If it were only that simple. Utilization and inquires are among the most obvious factors omitted. Fico will never reveal it's complete algorithm. They wouldn't make any more money if they did. Overall half-arsed artlcle.

Inquiries are part of new credit, and utilization maps to amount owed in that pie chart.

ok, but just because you receive an inquiry doesn't mean you're getting a new credit account. And you can have 50k in reported revolving debt and only be at 20% utilization if you have 250k in lines. It's too generalized IMO, but I get it. But there needed to be a disclaimer that there are more factors. Theres also other things like number of accounts with a balance, etc.

Inquiries are as good as meaningless for FICO scoring.

 

These explanations are always dumbed down for the least sophisticated consumer.

Yeah. You can't educate consumers that way though. I'm interested in why inquiries are meaningless. Back when I was applying for credit every few months I would notice an inquiry would take down my score before the new accts even reported. About 4-7 pts each. Is that not the case anymore?

For FICO 08, after you get to the 6th inquiry their is no more score effect. The overall effect of those first 6 inquiries is not very significant. When your score is marginal, it can seem like a bigger effect than it is.

 

Now that's just from a scoring perspective. From an underwriter's perspective lots of inquiries for someone with a marginal score can have a negative meaning, but new accounts are 'probably' much more significant potential negatives.

 

Once a credit history is significantly fleshed out with accounts with positive payment history... inquiries become next to meaningless. Though not completely meaningless.

 

However. Since the only way to avoid inquiries and new accounts is to not get any... The value of not having them is greatly diminished.

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Interesting.

 

Back in the day there was no Fico 8, or there was but they didn't give it a name. There was just a bankcard enhanced fico, a mortgage, and a car enhanced fico. But the main fico that myfico sold didn't have a name.

 

I would go on an app spree and suffer like 25 points for like 5 inquiries. I guess its not like that anymore.

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Interesting.

 

Back in the day there was no Fico 8, or there was but they didn't give it a name. There was just a bankcard enhanced fico, a mortgage, and a car enhanced fico. But the main fico that myfico sold didn't have a name.

 

I would go on an app spree and suffer like 25 points for like 5 inquiries. I guess its not like that anymore.

A great deal has changed since back in the day .

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Interesting.

 

Back in the day there was no Fico 8, or there was but they didn't give it a name. There was just a bankcard enhanced fico, a mortgage, and a car enhanced fico. But the main fico that myfico sold didn't have a name.

 

I would go on an app spree and suffer like 25 points for like 5 inquiries. I guess its not like that anymore.

A great deal has changed since back in the day .

 

 

I see that. I'm trying to catch up reading. Just read the entire $2 trick thread. Almost seems like they had to change things up from back after the crisis to try to convince lendors it wouldn't happen again.

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I'm lovin the pie chart with only 5 factors in a fico score. If it were only that simple. Utilization and inquires are among the most obvious factors omitted. Fico will never reveal it's complete algorithm. They wouldn't make any more money if they did. Overall half-arsed artlcle.

Inquiries are part of new credit, and utilization maps to amount owed in that pie chart.

ok, but just because you receive an inquiry doesn't mean you're getting a new credit account. And you can have 50k in reported revolving debt and only be at 20% utilization if you have 250k in lines. It's too generalized IMO, but I get it. But there needed to be a disclaimer that there are more factors. Theres also other things like number of accounts with a balance, etc.

Inquiries are as good as meaningless for FICO scoring.

 

These explanations are always dumbed down for the least sophisticated consumer.

 

I don't get it...

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I'm lovin the pie chart with only 5 factors in a fico score. If it were only that simple. Utilization and inquires are among the most obvious factors omitted. Fico will never reveal it's complete algorithm. They wouldn't make any more money if they did. Overall half-arsed artlcle.

Inquiries are part of new credit, and utilization maps to amount owed in that pie chart.

ok, but just because you receive an inquiry doesn't mean you're getting a new credit account. And you can have 50k in reported revolving debt and only be at 20% utilization if you have 250k in lines. It's too generalized IMO, but I get it. But there needed to be a disclaimer that there are more factors. Theres also other things like number of accounts with a balance, etc.

Inquiries are as good as meaningless for FICO scoring.

 

These explanations are always dumbed down for the least sophisticated consumer.

 

I don't get it...

 

 

What of the following is easier to explain to your cousin Cooter?

 

"Amount owed"

 

or

 

"Total utilization* across all credit cards, the number of cards at various individual utilization* levels, the number of cards with balances compared to the number of cards without balances. The more cards with balances reporting the lower your score, but if all cards report a zero balance this also lowers your score."

 

* Utilization is the balance reporting** on a revolving account divided by its credit limit, except in the case of charge cards which have no preset spending limit. Also, cards over $4x,xxx also do not count for utilization calculation for some FICO models.

 

** Some cards report balances as of the statement date, others report as of a fixed day of the month (often the last calendar day).

 

----

 

etc."

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I'm lovin the pie chart with only 5 factors in a fico score. If it were only that simple. Utilization and inquires are among the most obvious factors omitted. Fico will never reveal it's complete algorithm. They wouldn't make any more money if they did. Overall half-arsed artlcle.

 

Inquiries are part of new credit, and utilization maps to amount owed in that pie chart.

ok, but just because you receive an inquiry doesn't mean you're getting a new credit account. And you can have 50k in reported revolving debt and only be at 20% utilization if you have 250k in lines. It's too generalized IMO, but I get it. But there needed to be a disclaimer that there are more factors. Theres also other things like number of accounts with a balance, etc.

Inquiries are as good as meaningless for FICO scoring.

 

These explanations are always dumbed down for the least sophisticated consumer.

Always did have a way of explaining things so I can understand them.

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I'm lovin the pie chart with only 5 factors in a fico score. If it were only that simple. Utilization and inquires are among the most obvious factors omitted. Fico will never reveal it's complete algorithm. They wouldn't make any more money if they did. Overall half-arsed artlcle.

Inquiries are part of new credit, and utilization maps to amount owed in that pie chart.

ok, but just because you receive an inquiry doesn't mean you're getting a new credit account. And you can have 50k in reported revolving debt and only be at 20% utilization if you have 250k in lines. It's too generalized IMO, but I get it. But there needed to be a disclaimer that there are more factors. Theres also other things like number of accounts with a balance, etc.

Inquiries are as good as meaningless for FICO scoring.

 

These explanations are always dumbed down for the least sophisticated consumer.

 

I don't get it...

 

 

What of the following is easier to explain to your cousin Cooter?

 

"Amount owed"

 

or

 

"Total utilization* across all credit cards, the number of cards at various individual utilization* levels, the number of cards with balances compared to the number of cards without balances. The more cards with balances reporting the lower your score, but if all cards report a zero balance this also lowers your score."

 

* Utilization is the balance reporting** on a revolving account divided by its credit limit, except in the case of charge cards which have no preset spending limit. Also, cards over $4x,xxx also do not count for utilization calculation for some FICO models.

 

** Some cards report balances as of the statement date, others report as of a fixed day of the month (often the last calendar day).

 

----

 

etc."

 

Cousin Cooter says... "huh"?

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