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Analyzing our credit scores

Analyzing our credit scores

We refinanced our house several months back to get a lower rate, which meant that the new mortgage holder eventually sent us a copy of our credit scores. So, I can now say that as of 7 months ago, our credit scores were in great shape. (I see no point in actually paying for them, so that knowledge will have to do.) Here’s what I found:

First, I noticed that they actually used 3 different scoring models: the FACTA Beacon 5.0 (which ranges from 300-850), the Fair Isaac Redeveloped FICO 2 (which ranges from 300-850) and the FICO Risk Score Classic 98 (which ranges from 336 to 843). My highest score came on the FACTA Beacon with a range of 14 points between the highest and lowest scores, and my husband’s highest score came on the Fair Isaac Redeveloped FICO 2 with a range of 23 points between the highest and lowest scores.

But I had to wonder about the comments stated on the report. They said:

  • Too many inquiries last 12 months. – Ok, this makes sense. I’ve applied for a couple of credit cards, opened a couple of bank accounts (where they DID check my credit) and then of course we applied for the mortgage.
  • Amount owed on revolving accounts is too high. – This one makes no sense. We pay our revolving accounts in full every single month. How can the amount owed be too high when it’s zero? Unless they count any balance, ever. I did once hit about half of my AMEX’s limit when I charged several plane tickets to Europe.
  • Proportion of balances to credit limits is too high on bank revolving or other revolving accounts. – Hm, we don’t have any bank revolving accounts. Maybe this is back to the AMEX?
  • Amount owed on accounts is too high. – Again, huh? The only thing we owe on is our mortgage, and that’s not really “too high” in comparison to the value of our house.
  • Inquiries did impact the credit score and, for models that indicate it, no derogatory info was found on the file. – No surprise on this one, I figured they would affect it.
  • Length of time revolving accounts have been established. – This one would make sense if it were only on my scores, but it’s on my husband’s as well, which doesn’t.

Obviously the exact formulas for figuring credit scores are kept secret because they are proprietary, but it’s odd to think that we’re in good shape financially & payment history-wise, have excellent credit scores, and we STILL have all sorts of comments on there as to why the scores aren’t even better.

View Comments (8)
  • I have some of the same comments on my report. I too think some of those comments don’t really apply.

  • “Amount owed on revolving accounts is too high.”

    Probably a timing issue, if it was before or after you paid this months bills.

  • The comments I get are like: Credit history not long enough + Not enough credit accounts. I always get advice to open a loan or another credit card account lol.

  • This just shows how arbitrary credit reports are. They only serve as general models for determining risk and don’t necessarily reflect reality. And it’s not like you can dispute them very easily. It’s frustrating that these institutions can have so much of an impact on our finances (i.e., loan rates) and for them to be in some ways, out of our control.

  • i just recently was refused credit , due to a mistake at equifax. hopefully i will get that fixed. scotia bank said that i had c for a score.
    could someone translate that for me?

  • I try not to worry too much about my credit report. It’s not something of my creation nor for my purpose. I just try to take care of my obligations and let the banks take care of theirs.

  • As a mortgage broker in the real world, I see a lot of credit reports. And you’re right, those stupid little comments don’t seem like they make a lot of sense, but I’ll try to help translate.

    You’re right about point 1. 5 inquiries is way too many for the perfect world of Equifax. It seems like 2 or more inquiries per year is too many for those guys. Pretty unrealistic if you ask me.

    Basically, points 2,3 and 4 mean the same thing. It’s either because you guys get too close to your limits every month (which doesn’t sound like the case) or you had balances at one time, which is being reflected with that little comment.

    A lender is more concerned if they see 2 or more credit cards right near their limit. As an interesting side note, they also get a little concerned if you have only a fair score (in the 600-650 range) and lots of credit available (ie. 2 or more credit cards with little or no balance- lots of room for someone to charge)

    When they state “Length of time of revolving accounts has been established” that’s telling the person reading the report that you’ve had revolving accounts (credit cards or lines of credit) for over 2 years. This is a good thing. It shows that you have the ability to manage unsecured debts.

    And to redfox- a c score would probably put you in the 600-650 range, although one person’s c could be different from another’s.

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