Speaking of credit scores, ...

Factual Questions
1

What gives with some of these criteria?

Several months back I got an equity line, so I got a credit report. I usually don’t worry about such things, figuring I should have a good score. I do, but they list reasons it wasn’t higher, and they say:

1 - You have high balances on accounts in your credit report.

That would be BANK accounts, not credit accounts. I don’t carry any debt except my mortgage, and certainly not credit card debt. You would think having money in the bank would RAISE my score. Thank you for reminding me that I have a few bucks that should be moved into my brokerage account.

2 - You have too few bank/national revolving (including credit card) accounts.

OK, I’ll grant them this. I have exactly one. Why carry more? It’s just more places to deal with should my wallet get lost or stolen.

3 - You have a relatively short history of using credit.

Now, THIS really gets me. I’ve had that one credit card for something like 15 years and owned three properties, going back 20 years or so. How the hell long do you have to use credit?

2

Here is my WAG:

  1. Under the FACT act, they are required to give reasons for your score. But this is a murky area of mathematical modeling. There may not be any good
    reasons for the score. So instead, you get random crap. I’ve seen this on lots of credit reports.

  2. Regarding the high balance reason. It is a red herring. They needed to say something. Money in the bank is irrelevant to your FICO score. Bank accounts are not a significant factor in the FICO formula.

http://www.myfico.com/Offers/myFICO_UYCS%20booklet.pdf

  1. Too few accounts can affect your score. There is no logic to it, per se. The FICO score is a model for estimating the likelihood that you will file for bankruptcy. People with less than three accounts apparently file more bankruptcies.

http://www.myfico.com/Offers/myFICO_UYCS%20booklet.pdf

  1. Short history. Again, they *had *to say something.

Here is a handy guide to the reason codes, btw:

http://www.studentplatinum.com/education/reasons.php

Hope this helps.

3

Whoops. Second link should be this one:

http://www.go-uag.com/services/31_facts.html