Major FICO swings (70+ points)

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CarefulBuilder14
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Major FICO swings (70+ points)

Postby CarefulBuilder14 » Wed Oct 08, 2014 8:59 pm

I was browsing on myfico (I'm not registered there yet, so don't look for me) and I saw a few people who report in their signatures that their FICOs rise from about 570 or 600 up 70-100 points in a month or two. How is this possible?

I expect some changes could come from successful disputes or negotiating a deletion. It would have to mean quite a few late payment marks were coming off, though.

A bankruptcy falling off could explain it, but not the frequency with which I see it.

Could it be inquiries from a major app spree falling off? Finally paying off a seriously delinquent account?

It affects all three bureaus - including EX.

I guess I should register and ask the individuals there, but I was wondering if there was one major cause of this or anything like that. Perhaps those people have just started to rebuild their credit and are just going for the low-hanging fruit in terms of disputes or getting a healthy history on a new secured card?
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PlyrStar93
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Postby PlyrStar93 » Wed Oct 08, 2014 10:13 pm

I think most probably they are because of negative tradelines and collections being deleted, then it comes down to public records and bad accounts falling off. There is a board there called "Rebuilding Your Credit" and many threads are about how they dispute/PFD and have negative accounts/collections deleted.
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otter
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Postby otter » Wed Oct 08, 2014 10:16 pm

CarefulBuilder14 wrote:I was browsing on myfico (I'm not registered there yet, so don't look for me) and I saw a few people who report in their signatures that their FICOs rise from about 570 or 600 up 70-100 points in a month or two. How is this possible?

I expect some changes could come from successful disputes or negotiating a deletion. It would have to mean quite a few late payment marks were coming off, though.

A bankruptcy falling off could explain it, but not the frequency with which I see it.

Could it be inquiries from a major app spree falling off? Finally paying off a seriously delinquent account?

It affects all three bureaus - including EX.

I guess I should register and ask the individuals there, but I was wondering if there was one major cause of this or anything like that. Perhaps those people have just started to rebuild their credit and are just going for the low-hanging fruit in terms of disputes or getting a healthy history on a new secured card?


If you look up the components in the FICO formula, there can only be two things which can cause that dramatic of an increase- credit history and utilization. Credit history is around 35% on average and utilization is around 30%. So even having a lot of inquries fall off all at once can't really move your score all that much. I don't even think it's baddies falling off at the end of their "natural" life(seven years) because by then, their effect on your score isn't all that much. I suspect the major jumps in scores on FICO can be explained by either pay for deletes, a thin but perhaps not-so-good file all of a sudden reporting positive activity, or people decreasing their utilization by going on major app sprees.

No one really knows the exact FICO algorithm, but I've been all over the scale at some point in my 2 decades plus credit history. The best I can figure out is that it is a lot easier to increase your score dramatically if it is poor to begin with. Someone with a 600 score can get to 700 a lot easier than someone who is at 750 can get to 800. I don't know if you are a baseball fan, but here's an analogy: You start the first six weeks of baseball season with a major slump- your bating average is .150. All of a sudden, your bat catches fire and over the next week you bat say 3 for 4 or 4 for 5 every game. Your batting average is now .250 because you almost double the amount of hits. Someone else who had the same kind of week was .350 before the week but only went up to 380. Of course, if you are batting .150 later in the season, you're not going to see that huge of a jump no matter how good your hitting streak is. So bad credit which all of a sudden shows good activity goes up dramatically especially if it is thin (ie "early in the season").

Conversely, someone with an excellent credit score who has negative information added is going to have a huge drop in their score while someone with a really bad score might not even be affected by yet another late payment. Heck, I've even heard of people with a bankruptcy have their score go up once it starts showing on their report.
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Sometimes in my Wallet:
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In my sockdrawer: Amex BCE $1000[10-13, bd 91], OCCU Duck $10000 [11-13], The Sportsman's Guide Visa $8000[8-14], Chase Slate $4000 [9-14]Delta Gold Amex $2000 [2-15 bd 91], Diners Club MC $20000 [10-14] Commerce Bank Visa $2000 [3-15] Citi Double Cash $1000 [3-15]
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Postby flan » Thu Oct 09, 2014 8:22 am

otter wrote:If you look up the components in the FICO formula, there can only be two things which can cause that dramatic of an increase- credit history and utilization. Credit history is around 35% on average and utilization is around 30%. So even having a lot of inquries fall off all at once can't really move your score all that much. I don't even think it's baddies falling off at the end of their "natural" life(seven years) because by then, their effect on your score isn't all that much. I suspect the major jumps in scores on FICO can be explained by either pay for deletes, a thin but perhaps not-so-good file all of a sudden reporting positive activity, or people decreasing their utilization by going on major app sprees.


30 and 60 day lates are 'minor derogatories', which have a diminishing impact over time. 90 and 120 day late are major, and they start off as "very, very bad" and decrease to "very bad" over time. (The claimed purpose of the basic fico score is 'how likely to become 90 days late', so becoming 90 days late is nasty for that.) If you do something like stop paying a loan, you'll have a series of lates -- 30, 60, 90, 120,120... until the lender closes the account as a loss. The whole account is supposed to disappear when that 30 day late becomes 7 (or 7.5) years old, so you lose a bunch of lates all at once.

It's not uncommon that people have a bunch of accounts that all go delinquent at the same time, because they lost a job, got divorced, or took up smoking meth. So a profile can go from looking like "oh, what a dead beat!" to "short history, nothing bad" pretty quick.

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Postby djrez4 » Thu Oct 09, 2014 9:10 am

Assuming that meth smokers are deadbeats? That's discriminatory. There's no "smokes meth" factor in the FICO score for a reason.
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Postby takeshi » Thu Oct 09, 2014 10:10 am

CarefulBuilder14 wrote:Could it be inquiries from a major app spree falling off?

Unlikely. Big changes in scoring are most like to come from improvments to the major factors:
http://www.myfico.com/crediteducation/whatsinyourscore.aspx

As stated above and indicated by the chart that's most likely due to improvements in Payment History and Utilization (Amounts Owed). That's why the usual suggestion for those looking to improve their credit is address derogs and utilization first.

I indicated in your other thread asking about high utilization and CLI's that drastic improvements to utilization significantly improved my credit and scores from the end of 2012 to now. I went from low 700's to right around 800 and that's even with all my new accounts and their associated inquiries factored in as well.

CarefulBuilder14 wrote:Perhaps those people have just started to rebuild their credit and are just going for the low-hanging fruit in terms of disputes or getting a healthy history on a new secured card?

Positive history on a new card won't hurt but it won't drastically improve one's score if there are derogs with significant impact. However, getting such derogs removed would provide a significant improvement.

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Postby thom02099 » Thu Oct 09, 2014 10:21 am

CarefulBuilder14 wrote:I was browsing on myfico (I'm not registered there yet, so don't look for me) and I saw a few people who report in their signatures that their FICOs rise from about 570 or 600 up 70-100 points in a month or two. How is this possible?

I expect some changes could come from successful disputes or negotiating a deletion. It would have to mean quite a few late payment marks were coming off, though.

A bankruptcy falling off could explain it, but not the frequency with which I see it.

Could it be inquiries from a major app spree falling off? Finally paying off a seriously delinquent account?

It affects all three bureaus - including EX.

I guess I should register and ask the individuals there, but I was wondering if there was one major cause of this or anything like that. Perhaps those people have just started to rebuild their credit and are just going for the low-hanging fruit in terms of disputes or getting a healthy history on a new secured card?


Any number of factors could contribute to such an increase. There is no one answer that will fit everyone. Much has been made on a variety of forums from the "experts" in what contributes to big increases, but the bottom line is, no one knows for sure except those on the inside that are "in the know"...and they aren't telling.

Each person has their own individual experiences that can document such an increase. We all know (or should know) the factors that contribute to increasing one's scores. It seems to be a combination of factors at one specific moment in time that can make a score take a big jump.

Speaking only for myself, that moment came when I received a windfall amount of money and immediately paid off credit cards and other debt that I had that were carrying balances. My utilization went from ~35-40% to <3% on my cards. Also, my scores were much lower than they currently are, in the 600-low 700 range, and I only had a handful of cards at the time, so that could also be a factor, where one is in the range of scores and what impact paying off that much debt would have on one's scores. If I did the same thing today, with scores in the upper 700-800 range, I would not see the same impact. I think much has to do with where one is in the RANGE of scores, that results in big jumps in scores.
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Postby CarefulBuilder14 » Thu Oct 09, 2014 11:09 am

Well, it does make sense that improvements in a few different areas could account for the big score changes. Pay-for-deletes would explain the frequency more than having things fall off.

I hadn't really considered the positive effect on utilization of someone getting a big limit on a new CL card. If someone is using $3k of a $5k line but can convince an issuer (probably a credit union) to give a new $10k limit, then his or her overall utilization falls from 60% to 20%.

And I understand how the 570 to 670 leap is a lot easier than the 670 to 770 one! A 770 needs a fair amount of good information, which disputing can't provide.
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Postby otter » Thu Oct 09, 2014 4:43 pm

djrez4 wrote:Assuming that meth smokers are deadbeats? That's discriminatory. There's no "smokes meth" factor in the FICO score for a reason.


I too detected a bit of anti-tweakerism in that post... wait- I suppose "tweaker" is a prejudiced term. Not all meth smokers are deadbeats. Some are just slow payers... once they get enough excess scrap metal (probably copper stolen from your plumbing to sell to the junkyard), they'll get their next fix and then maybe they'll pay their CC bills (if they don't crash first).
In my Wallet:
  • Amex PRG NPSL[3-14, bd 91]
  • Sallie Mae MC $8000[1-14]
  • Chase Freedom $4700[1-14]
  • Discover It $2750[8-13]
  • BoA UCF Alumni Cash Rewards $5000 [3-15]
Sometimes in my Wallet:
  • GM BuyPower WEMC $5000[9-14]
  • Wells Fargo Propel 365 Amex $7000[4-14]
  • Barclaycard Arrival WEMC $7000[3-14]
  • BoA Better Balance $3000[2-15]
In my sockdrawer: Amex BCE $1000[10-13, bd 91], OCCU Duck $10000 [11-13], The Sportsman's Guide Visa $8000[8-14], Chase Slate $4000 [9-14]Delta Gold Amex $2000 [2-15 bd 91], Diners Club MC $20000 [10-14] Commerce Bank Visa $2000 [3-15] Citi Double Cash $1000 [3-15]
Total CL: $90450



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