I got some thing in the mail today that was the result of a settlement of some class action against Progressive years ago, the result being a printed credit report and credit score from Experian. Of course, you're already entitled to a free report every year from each of the three agencies, but the scores you typically have to pay for.
It says I have an 805, which is better than 99.97% of all people they track. How messed up is that? I don't do anything particularly special in terms of credit. I just pay my bills. My student loans are history, and I've had a couple of cars, so maybe that's a contributor. I just can't imagine that the percentage of people who have a lesser history is that enormous.
The last time I checked (which was about 2 months ago) I had a 719. Not bad for using around 75% of my revolving credit for the past 6 months. I'm sure it can only improve with time as I get my used:available ratio down. I've never paid less than double a minimum payment, and I almost always pay about 4-5x the minimum.
The specific elements which which will raise your score are: significant available credit (high limits) with minimal usage, few or no recent inquires (applications for new credit), timely payments equal to or greater than minimum and length of history (longer is better).
The system will penalize those that open a new account to take advantage of a discount or who close an account not being used because they think they have too much credit or simply don't use it. Many people do this and as a result reduce their scores. They are probably not any less credit worthy than your score reflects; their scores are simply the result of a less than perfect empirical system.
There are a lot more factors that go into the calculation which is simply intended to indicate the likelyhood that credit will be paid back on a statistical basis loosely founded on factors designed to measure responsibility.
Courtesy of an old banker who remembers when we made decisions based on face to face discussions and personal assesements of one's character .... whatever has happened to human judgement?
I've kept open two personal accounts and two business accounts, and the total limits between the four cards is like $80,000. That's nuts! You'd think that having that much available to you would affect you negatively.
Sort of related, with the news stories about how interest rates are being bumped up for consumer cards, my Citi just went down to 8.46%. I don't ever remember having a consumer card with a rate that low for regular purchases.
Are we talking a generic 'credit' score or a bonafide FICO score?
Because a bonafide FICO score in the 800's is near impossible (especially for people our age)...
...and a 'credit' score is near meaningless.
EDIT - helps if I read. If it's from Experian it's not a bonafide FICO but rather their own number. (basically it's not the official number they report to creditors or that is used in credit decisions)
The only one who can give you a true FICO score is Fair Issac.
The number Experian gives you is different than what lenders, creditors and whatnot use.
Google the difference between true FICO scores and what people call FAKO scores.
An 800+ from Experian is almost certainly a FAKO.
More than 90% of credit decisions are based on a FICO score.
The credit agency supplied scores are a good indicator of how good your credit is (in your case outstanding), but nine times out of ten it's not the number that's being used.
With that said your credit score is so high because you're not using what credit is available to you and you pay your bills. It really is as simple as that. Age of credit, applying for credit and the mix of credit also plays a smaller role but those three together don't hold as much weight as the first two.
In general, the less likely you are to need credit, the higher your credit score, and in turn, the more likely you are to get it.
Just trying to inform. :)
Like I said, just trying to inform. Don't kill the messenger.
I've personally never been in a situation where anything than a FICO was used and from what I've learned in life the FICO is golden. I've never read, heard of or been told by anyone in the know (until your last reply) that anything other than an actual FICO meant shit.
Now I know that when I get insurance the carrier might be willing to use one of the credit bureau's proprietary, non-standardized numbers.
I'm still not putting a lot of importance on the bureau-created scores.
Jeff and Gonch .. you are both right! There are scores other than FICO which are used to determine credit eligibility. In fact, there are three different FICO scores reflecting the information at each of the three major Credit Reporting Agencies and they usually vary based on the data available. The TU scores Jeff is referring to were TU's FICO (EMPIRCA). All must by regulation be based on sound empirical data and reasonably rate risk based on that data. Since the information in each of the three CRA's vary somewhat, so does your score. The agencies may also calculate another score for consumer use, but that is calculated in a similar fashion and while it is not used by the lenders, it is a valuable tool to rank your relative standing among all consumers. Gee whiz, sounds like what a score is supposed to do! Many financial service providers, especially insurance companies integrate FICO into their algorithm that determines acceptable risk or calculate their own based on similar empirically based formulae. The relative weights of factors affecting your score are open to speculation, but frankly, what different does it make? The scores are only relative to other scores from the same provider. Further, Jeff's true FICO score could well be above 800 based on his data. I have reviewed thousands of FICO scores over the years as a lending officer with several of the nation's leading banks as well as auditing FNMA and FHLMC loans and can probably count the number of 800+ scores I've seen on one hand, but they do exist.
This fascination with FICO and all the "fix it" suggestions in the media and on the web specifically (25.9MM hits on FICO in Google) convince me how out of touch the information age has made us with the pragmatic world.
Pay your debts on time and don't borrow more than you know you can pay back. Barring unforseen financial tragedy, it is as simple as that. F.... the score.
BTW, don't be jealous, but I do have one consumer card at 4.50% for purchases and another at 4.00% (this one has a $25 annual fee). Neither is a special promo rate, but they do vary based on prime. Jeff's 8.46% is an excellent rate and reflects the fact that the bank's cost of funds is approaching zero, so they are still making a good return on those accounts that are paying. Also, Diana's difficulty in obtaining a home equity loan was no reflection on her or her employer's opinion of her. It is simply the result of the industry's prior business practices and the resulting credit crisis. Credit is still available; one just needs to find a lender in a position to and comfortable with extending the credit.
Iceracer:
"The agencies may also calculate another score for consumer use, but that is calculated in a similar fashion and while it is not used by the lenders, it is a valuable tool to rank your relative standing among all consumers."
This is what I was trying to get across - that the score Jeff received was probably this score...and while it signifies outstanding credit, no one is going to pull an 805 when Jeff attempts to do something that requires a credit check and subsequent decision. It's not the FICO score.
Carrie: Thanks for the FairIssac links. I had intended to include them. No better resource than the creator of the scores. Wikipedia, in this reference, provides a good overview and in my experience appears to be very accurate. The only area I would question, but not doubt, is the makeup of the scores. Jeff is correct, in that most insurance companies do use a number from the credit bureaus to assess initial risk and will exclude prospects with credit history not meeting their standards. I know because I have represented several major companies and also am licensed in 29 states.
Gonch, I'm not sure what your point is since Jeff's score is well into the top tier for preferred credit rates and terms no matter how it was calculated, whether FICO or Fako or something else. As I said before, if you handle your finances responsibly it really doesn't matter. The score will reflect the behavior.