FICO Changes Could Lower Your Credit Score

[Eclipser]

I was at 785 up until august of last year.

lost everything and my shyt done dropped back down to below 600

Prolly wont see it back at that level for another 10 years

What happened, breh?

 

[Afro]

Credit scoring and reporting companies also recently started factoring in such information as bank account balances and utilities payments to help give consumers with limited credit histories a better shot at getting loans.

I got $9.95 in there right now

 

[Raw Lyrics]

,, that shyt is a joke anyway,,,I remember I paid my car off early and that shyt dropped about 20 points

That's because an "account" was wiped off your books, which deducts from the overall age of your accounts.

So for example, you were paying the car off for 4 years, that's 4 years of age that gets averaged into your overall credit age.

So let's say for example, the age of your credit is 7 years (considered good), and you pay off that car loan in 4 years, that 4 years of age now gets averaged out of your overall credit age - since it's now considered a closed account.


Now, your overall credit age drops from 7 years to, lets say, 6 years (which is mediocre). That would result in a 10-20 point drop. However, you should have gotten those points back in a few months, assuming you were fiscally responsible.

Also, the way credit age works is that they take the total number of open accounts (doesn't matter if it's credit card accounts, or car financing accounts) and averages them out by the date of when you opened the account.

So if you have 6 accounts and you opened them all 7 years ago, the average age of your credit history is 7 years old. However, most people start off with one account and slowly open up more accounts in the subsequent years as their credit improves.

 

[Mr. Negative]

How??!!

What happened, breh?

lost my job and couldn't bounce back fast enough.

credit cards payments hit my bank account and everything went to negatives and collections.... including my bank account.

once I pay it all off, I'll prolly get a couple of secured credit cards, attach each one to a recurring bill/utility and start over from scratch.

It's not the first time I've lost everything or even the second. When nobody's got your back, shyt's like walking a tightrope.

Take L's and bounce back.

I've had three (low points in my life). I'm on my third one right now.

There's the tiniest speck of glitter sized hope. But I don't even really believe in hope anymore.

shyt feels so familiar, I really halfway don't even care.

 

[Raw Lyrics]

lost my job and couldn't bounce back fast enough.

credit cards payments hit my bank account and everything went to negatives and collections.... including my bank account.

once I pay it all off, I'll prolly get a couple of secured credit cards, attach each one to a recurring bill/utility and start over from scratch.

It's not the first time I've lost everything or even the second. When nobody's got your back, shyt's like walking a tightrope.

Take L's and bounce back.

Salute for bouncing back breh!

 

[Deflatedhoopdreams]

The headline is misleading. Your score is actually probably going to go up if it’s good.

The new score makes good borrowers look even better and poor borrowers look even worse.

This is what I took from it too.

 

[LeVraiPapi]

I got up to 810 because (thanks to God) I was able to pay off my biz and personal debts. Now I have a 1 mil credit line with Wells Fargo. I am not touching that with a 10 inch pole.

Guys just make sure you keep a high limit CC open. I d say 2 of them. Also take small loans and pay them off. Even if its 1k at a time.

This is what I did to get a big boost.

1. Calculate my monthly expenses.

2. Take 2 a personal loan worth 2 months of expenses. Use that loan to pay off your bills.

3. Take the money you would use to pay off your bills then pay the loan in 4 to 6 installments. Before your last payment go to step 4.

4. Then open a CC. Get one with 0% APR for 1 year or more. By then your score should be up 30 pts at least. Use the CC to pay your bills. Pay off the CC bill in full on the due date. Do that for 4 months. Then ask for a Limit increase.

5. Get Credit Karma and check your odds for good cards. Get another card with a higher limit, but make sure they give you rewards. Rewards for lets say spending 2k and you get 150 $ or more. Take that card and do a balance transfer from the previous CC. Most of them would give 0 fee balnace transfer anyway.

6. Put only bills you would normally pay on that card. Start with all of your bills. Then cut to 75% then to 50% then to 25% then to 5%


Those show a pattern of financial responsibility. Lenders will more likely open their doors for you once they see those patterns.

Also all cards have rewards now. Use them.

Y'all welcome!

 

[goatmane]

lost my job and couldn't bounce back fast enough.

credit cards payments hit my bank account and everything went to negatives and collections.... including my bank account.

once I pay it all off, I'll prolly get a couple of secured credit cards, attach each one to a recurring bill/utility and start over from scratch.

It's not the first time I've lost everything or even the second. When nobody's got your back, shyt's like walking a tightrope.

Take L's and bounce back.

Did you ever consider bankruptcy ?

 

[Raw Lyrics]

I got up to 810 because (thanks to God) I was able to pay off my biz and personal debts. Now I have a 1 mil credit line with Wells Fargo. I am not touching that with a 10 inch pole.

Guys just make sure you keep a high limit CC open. I d say 2 of them. Also take small loans and pay them off. Even if its 1k at a time.

This is what I did to get a big boost.

1. Calculate my monthly expenses.

2. Take 2 a personal loan worth 2 months of expenses. Use that loan to pay off your bills.

3. Take the money you would use to pay off your bills then pay the loan in 4 to 6 installments. Before your last payment go to step 4.

4. Then open a CC. Get one with 0% APR for 1 year or more. By then your score should be up 30 pts at least. Use the CC to pay your bills. Pay off the CC bill in full on the due date. Do that for 4 months. Then ask for a Limit increase.

5. Get Credit Karma and check your odds for good cards. Get another card with a higher limit, but make sure they give you rewards. Rewards for lets say spending 2k and you get 150 $ or more. Take that card and do a balance transfer from the previous CC. Most of them would give 0 fee balnace transfer anyway.

6. Put only bills you would normally pay on that card. Start with all of your bills. Then cut to 75% then to 50% then to 25% then to 5%


Those show a pattern of financial responsibility. Lenders will more likely open their doors for you once they see those patterns.

Also all cards have rewards now. Use them.

Y'all welcome!

+Rep

 

[Mr. Negative]

Did you ever consider bankruptcy ?

Nah.

 

[☑︎#VoteDemocrat]

I got up to 810 because (thanks to God) I was able to pay off my biz and personal debts. Now I have a 1 mil credit line with Wells Fargo. I am not touching that with a 10 inch pole.

Guys just make sure you keep a high limit CC open. I d say 2 of them. Also take small loans and pay them off. Even if its 1k at a time.

This is what I did to get a big boost.

1. Calculate my monthly expenses.

2. Take 2 a personal loan worth 2 months of expenses. Use that loan to pay off your bills.

3. Take the money you would use to pay off your bills then pay the loan in 4 to 6 installments. Before your last payment go to step 4.

4. Then open a CC. Get one with 0% APR for 1 year or more. By then your score should be up 30 pts at least. Use the CC to pay your bills. Pay off the CC bill in full on the due date. Do that for 4 months. Then ask for a Limit increase.

5. Get Credit Karma and check your odds for good cards. Get another card with a higher limit, but make sure they give you rewards. Rewards for lets say spending 2k and you get 150 $ or more. Take that card and do a balance transfer from the previous CC. Most of them would give 0 fee balnace transfer anyway.

6. Put only bills you would normally pay on that card. Start with all of your bills. Then cut to 75% then to 50% then to 25% then to 5%


Those show a pattern of financial responsibility. Lenders will more likely open their doors for you once they see those patterns.

Also all cards have rewards now. Use them.

Y'all welcome!

Is there any benefit to all of this?

 

[Raw Lyrics]

Is there any benefit to all of this?

From what I read you get the same exact low interest rates on 760 FICO score as you would for an 800 score. So it's just bragging rights after 750-760, as the interests rates can't get any lower after that point.

With that being said, if you mortgage a home, a high credit score could mean a heck of a lot of money in savings, over the long term.

 

[VladTheImpaler]

wsj.com
FICO Changes Could Lower Your Credit Score
AnnaMaria Andriotis
7-9 minutes
Changes in how the most widely used credit score in the U.S. is calculated will likely make it harder for many Americans to get loans.

Fair Isaac Corp., creator of FICO scores, will soon start scoring consumers with rising debt levels and those who fall behind on loan payments more harshly. It will also flag certain consumers who sign up for personal loans, a category of unsecured debt that has surged in recent years.

The changes will create a bigger gap between consumers deemed to be good and bad credit risks, the company says. Consumers with already-high FICO scores of about 680 or higher who continue to manage loans well will likely get a higher score than under previous FICO versions. Those with already-low scores below 600 who continue to miss payments or accumulate other black marks will experience bigger score declines than under previous models.


Keeping ScoreAverage U.S. FICO scoreSource: Fair Isaac Corp.


2010’12’14’16’18685690695700705710
April 2018x704

The changes are an about-face from recent years, when FICO and credit-reporting companies made changes that helped increase scores for some consumers, such as removing some negative information, including civil judgments, from credit reports.

Credit scoring and reporting companies also recently started factoring in such information as bank account balances and utilities payments to help give consumers with limited credit histories a better shot at getting loans.

Those recent moves can help revenue-hungry lenders identify more creditworthy consumers and make it easier for them to be approved for loans. Average FICO scores have been rising steadily following some of these changes and an improving economy.

The U.S. consumer borrowing industry revolves around companies such as FICO, which help lenders decide whom to lend to. Credit-reporting firms including Experian PLC, Equifax Inc. and TransUnion collect data on consumers and compile it in consumers’ credit reports, which then determine their FICO scores.

The new FICO changes reflect a shift in U.S. lenders’ confidence in the economy, which has been expanding for more than 10 years. Consumer loan losses remain low compared with during the last recession, but consumer debts are at record highs, with many Americans forced to rely on debt to help fund their everyday lives.

Lenders in recent years had asked the credit-reporting and scoring companies to help them find more borrowers. But lenders are also trying to balance the need to expand loan volume with a rising concern about the longevity of the economic recovery and whether credit scores are making some consumers appear more creditworthy than they are.

“There are some lenders that see there are problems on the horizon in terms of consumer performance or uncertainty [about] how long this [recovery] is going to go,” said David Shellenberger, vice president of scores and predictive analytics at FICO. “We definitely are finding pockets of greater risk.”

On an earnings call last year, Capital One Financial Corp. Chief Executive Richard Fairbank warned that consumers across the industry might not be as creditworthy as their scores suggest.

Missed payments and most other negative information that would hurt a score typically roll off a report after seven years, which means lenders might not have insight into how a consumer fared during the crisis, he said.

The changes will affect new versions of the FICO scores. FICO updates its scoring model every few years to reflect changes in consumer borrowing behavior and performance. When it last announced such changes, in 2014, they were viewed as likely to help boost consumers’ credit scores.

Whether to adopt the new FICO scores will be up to lenders, which can generally decide which version of FICO to use or whether to use a competitor such as VantageScore. (There are some exceptions: For example, most lenders use a certain version of the FICO score to sell mortgages to Fannie Mae and Freddie Mac. )

One of the new versions, called FICO 10 T, will place greater weight on recently missed payments. Consumers who fall behind or stop paying their debts are likely to see their credit scores fall more with this model. Those whose last delinquency is at least a year old could see an improvement in their scores.

SHARE YOUR THOUGHTS
Has your credit score recently improved—or fallen? How did the change affect your behavior, if at all? Join the conversation below.

The changes are meant to partly offset the effects of settlements between credit-reporting firms and states that date to 2015. Those settlements, aimed at removing erroneous information from credit reports, resulted in Equifax, Experian and TransUnion removing most tax liens and judgments from reports.

Unlike previous FICO scores, 10 T will assess how consumers’ debt levels have changed during the past two or so years. FICO scores so far have reflected consumers’ balances during roughly the most recent month tracked. This change will place more weight on rising debt levels. Consumers who previously paid their credit-card bills in full but shift to carrying growing balances for several months will likely end up with a lower score. On the other hand, consumers who tend to increase card debt during a specific month each year and then pay it off quickly will likely experience a smaller drop in their score than they currently do.

The changes will likely hurt scores even more for consumers who have a high “utilization” ratio—for example, when credit-card debt is nearly equal to a consumer’s set spending limit—for a sustained period of time.

FICO for the first time will place more weight on personal loans in a way that penalizes some borrowers. For example, consumers who transfer credit-card debt to a personal loan but continue to rack up credit-card balances will likely experience a bigger drop in their credit scores.

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Write to AnnaMaria Andriotis at annamaria.andriotis@wsj.com

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So wait..... if a person continue to get unsecured loans.... it negatively impacts your credit...
if you keep adding more debt to the debt you already have..... it negatively impacts your credit...

what about it

 

[LeVraiPapi]

Is there any benefit to all of this?

I am not sure if you are serious or not. However, when I refinance my home I can take the equity and get 2 condos for AirBnB or expand my business. Getting a car and going through a credit union to get that 2-3% interest rate. With my business credit line at Wells Fargo, I can buy 400k worth of goods for Q4 2020 and make a cool ass return since I know I can make double that. I get plenty of rewards and can get loans interest free which will as well boost my scores.

 

[LeVraiPapi]

From what I read you get the same exact low interest rates on 760 FICO score as you would for an 800 score. So it's just bragging rights after 750-760, as the interests rates can't get any lower after that point.

With that being said, if you mortgage a home, a high credit score could mean a heck of a lot of money in savings, over the long term.

Breh, there is a big difference. Trust me on that.

When I got my first car, there was an old guy with an 800+ score that walked in. Put no money down and drove off with the same year model at a 1.4% rate.

It's all about how you negotiate. You are on point about the mortgage too. That's my next move. I owe 264k on 395k home now. I been getting calls and letters and emails to refinance. EVerybody got a shot except for BoA. I will never forget when they said I qualified for 85k to buy a home.

I think lowkey that motivated me