Wednesday, March 07, 2007
Equifax ScoreWatch - determining the reasons for FICO credit score changes
Sometimes I recommend the myFICO Equifax ScoreWatch subscription to clients, especially when they need certain scores for a mortgage. But I’ve noticed that often people get confused by the alerts, so here is an alert I got a few days ago:
And a few explanations:
The previous alert was on 2/18/07 and the FICO score was 645. Now the score is 674 and I was quite surprised by the 29 point increase, didn’t have any other changes.
From the alert:
This score increase may be caused by these 4 factors having less of a negative impact on your FICO score:
The time since your most recent account opening is very recent
You have too many bank/national revolving accounts with balances being reported
The time since your most recent account opening is very recent
You have too many bank/national revolving accounts with balances being reported
Obviously, there are NOT 4 factors, since 2 of them are merely listed in duplicate. This is typical for Fair Isaac’s products, buggy!
The alert also lists a change:
1 of your accounts reported balance increases
Often consumers draw the WRONG conclusion, thinking that the scores went up because the balance increased. In my case, I’m certain that the score went up because it’s been 6 months since I opened a new account. I’m surprised that I got that many points, it may also have to do with the inquiries getting older. I COULD go back to my old reports and compare the score factors, but I barely have time to do this for my clients, am too busy to spend hours on my own reports.
I opened several accounts last summer since I’m building a house, financed by credit cards until I’m done and can get a mortgage. It’s not anything I’d recommend, but as I was researching building, I ran across several sites by owner builders who had financed building with credit cards. I had looked into construction loans, but between the cost of having to hire an APPROVED general contractor and having to provide plans, it’s much cheaper to use credit cards for 6 - 12 months. And that’s especially true when you get the 0% offers.
And, it made for a very interesting project, watching my scores drop from 750+ to the 620s.
In January my TU was 623 (according to the WaMu monitoring) and on Monday it was 701 when I applied for a mortgage. Unfortunately, TU STILL has my myFICO reports blocked, it truly sucks that I constantly have to sue. So I have no idea why the score was so low a couple months ago when in fact my debt is almost $20K less on the TU report, since they deleted a couple Cap One accounts rather than reporting the credit limits.
And my Experian FICO is at 645, here are the score factors:
You’ve made heavy use of your available revolving credit.
You’ve recently been looking for credit.
You have too many credit accounts with balances.
You’ve recently opened too many new credit accounts.
Obviously, the B/L ratio is first, but I sure am surprised to see the inquiries as the 2nd factor:
March 05, 2007 Nco Financial Systems
September 30, 2006 U S Bank Consolidated
September 18, 2006 Bank Of America
September 06, 2006 Thd/Cbsd
August 10, 2006 Advanta Financial Corp
June 12, 2006 Cbusa/Cbsd
June 12, 2006 Fia Csna
The score was also 645 for the mortgage on 3/5 (the NCO inquiry) and the other inquiries are all over 5 months old. It’s really too bad that Experian doesn’t give the details for the factors as Equifax and TU. But that goes to show how important inquiries can be. If I didn’t have the inquiry on Monday, my Experian might well have gone up substantially in a month when the 2006 inquiries are 6 month old. IF ....
Inquiries are NOT a factor on my Equifax report. I also have 6 inquiries prior to the 3/5 mortgage inquiries, but the last one was on 8/24.
Also, not the “recent” in the Experian score factors. And, despite the 3/5 inquiry, all the scores I got were identical to the mortgage broker’s scores. So apparently the MORTGAGE inquiry is not at all counted, for 30 days?
And finally, if you subscribe to ScoreWatch, make sure you order new myFICO reports through ScoreWatch, you save a few bucks as they’re “only” $11.
2003 Suit (appealed, Experian filed credit reports on PACER) • Fair Isaac - credit scoring fraudware • (0) Comments • Permalink
