Credit score greatly matters in today’s financially driven world. In this episode, Merrill Chandler discusses FICO, including all three bureaus and myFICO advanced credit report. He talks about revolving utilization and the necessity to compare accounts. Merrill also clarifies to us what is serious delinquency, where one’s debt limit is based on, and how evaluating different criteria between bureaus are done. Join Merrill as he takes us deeper to FICO’s power, how you exercise your rights under the fair credit reporting act and feel free to dispute, and so much more.
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Into The Madness Part 1: Capitalizing On FICO’s Stronghold On The 90%
We’re going to be doing one of our installments in the series Into the Madness. Our Into the Madness series is going through myFICO, Experian and TransUnion credit reports and consumer disclosures. I want you to know what to look for, what you’re reading, etc. We’re going to be talking about myFICO. We’re going to deep dive into reading and interpreting the myFICO credit report. I want to make sure that you understand how big of a deal this is. Most people don’t know what it takes to be fundable. We’ve talked about that many times. Even when you’re given the facts, even when you’re given the data right in front of you, sometimes it’s so confusing or sometimes the truth is hidden in bits and pieces. We don’t know how to connect all those dots.
In this Into the Madness series, we’re going to go through the myFICO advanced credit report. That’s all three bureaus. In upcoming episodes, we’re going to be talking about Equifax, Experian and TransUnion, revealing all of the data points that the bureaus are collecting and they’re reporting about you. Let’s get to this exciting version. I have a report pulled out on September 16, 2019. The second page is the same for all reports, which are the FICO advanced report. It’s giving us the FICO score eight. This is the unweighted scores we’ve discussed in the past. The unweighted score is FICO’s FAKO score, but it give us the raw data reading.
These scores represent the raw data. There’s no waiting for auto loans or waiting for mortgages or waiting the data for a vertical or industry-specific score. That’s one of the things that we’ll be looking at because we’re going to be reviewing the several scores so you understand how to read the scores and which industry-specific scores they belong to. This is FICO eight. This is where they start out with. They show you what maybe they consider very important data for you, the revolving utilization.
This is not the utilization that’s included in your auto loans, your mortgages, and your student loans. This is revolving, your credit cards, credit lines and charge cards. It’s showing that it’s 80%. The good news for this borrower is it’s the same across all of them. When you pull yours, you may not have the same across all of them. That is going to be a problem. For those of you who have attended my bootcamp or are planning on going to my bootcamp where we do an entire evaluation of your fundability, you’re going to find out that when you do your fundability index, we want to round it to the worst-case scenario. One of these were 60. If Experian were 60, we want to round to the worst-case scenario, which in this case would be 80% utilization. That’s all at GetFundable.com. Click on the Bootcamp or you can go directly there by going to GetFundableBootcamp.com.
The next thing we’re looking at, which is vital because the FICO has five areas that it evaluates. It’s putting what’s the score, what’s the utilization, and then we’re looking at new credit. These inquiries posted your credit report in the last twelve months. It’s a rolling twelve months. Twelve months from now, one of these would fall off after it hits its twelfth birthday. Here’s the problem with what we’re being led to understand. FICO only evaluates twelve months’ worth of inquiries for its score. Inquiries count against you for 24 months on underwriting. The next time we review your consumer disclosures from the bureaus independently, you’re going to know they keep 24 months’ worth of scores because lenders want to know how long you’ve been chasing money. The lookback periods are 3, 6, 12 and 24 months. FICO is only scoring twelve months of it.
The bureaus are keeping 24 months’ worth of inquiries because the algorithm for lenders is scoring all the way back through that 24 months lookback period. In this case, each one of these are individually specific. This borrower, when they pulled Ally Financial, this lender only pulled one score. It’s the same with this auto loan. It’s the same with the University Federal Credit Union. Each one of them pulled only one. If there was a Capital One, you’d probably see two credits pulled because Capital One believes in belts and suspenders. There’s only one. If there were mortgages in here, it’d be across all three.Different bureaus have different measurements. Click To Tweet
You want to count whenever you’re counting a number of inquiries. There are two counts that are important to you. Total inquiries across all three bureaus. There were seven total inquiries. The other measurement is, how many inquiries in every six months have you gotten? That’s what FICO measures over the last twelve months and it’s important to understand. We want to keep those inquiries down to a minimum. We’ve discussed in previous episodes about two inquiries per year, once per six months. I would tell this borrower to chart it out and see how many you’re getting. Notice there’s one, there’s two days later and there’s eight days earlier. It looks like this individual was shopping for a vehicle. We have five within eight days, all from Experian. What is that doing? That’s pounding Experian as a bureau. You’re going to trigger some negative indicators there.
The CBNA and the Citi Cards, notice there’s a TransUnion and an Experian. In this case, in the same day, it looks like CBNA and Citi Card pulled two inquiries like I said in Capital One. Part of the reason why they do two inquiries is if your risk rate is a little high, they want to check the data. They want to compare one versus the other. The problem is when you look at this borrower, the range between scores, we want it to be under ten. This is two points apart. The data is faithful. When Citi pulled this, they are going to see two relatively close scores. We’ll go into more detail when we get to the line of credit scores or the bankcard scores.
They pulled two of them because they want to make sure that they’re getting a good read on all of the data. Notice that for all of these inquiries in that period, Ally Financial and Citi approve this borrower. It says it’s reporting to all three bureaus. That is vital. We do not want to engage with any institutions and any lenders that don’t report to all three bureaus because it will cause that very range to increase. We don’t want it to be over ten points. We believe based on anecdotal evidence from students and clients that we get kicked out of automatic underwriting into manual underwriting when there are more than twenty points.
Comparing Negative Accounts
We’re going to enumerate the negative items. These are opened or closed accounts. We want to make sure that it’s apples and apples when we compare. Negative accounts, Bank of America, Mountain America and Wells Fargo. There are two burned tier-one accounts here or lenders. There’s one tier-three, which is a credit union. They’re reporting to all three. We have to build those relationships back up with those burned lenders if we ultimately want to borrow from either the Wells Fargo or the Bank of America ever again. We need to make sure that we repair or revisit and renew those relationships. We have multiple collections and it’s telling us which ones they’re reporting on. Mountain Medical is on three, two for DirecTV, three for Intermountain Healthcare, three for Comcast, TransUnion and Experian.
We notice that Intermountain Healthcare has same designation. There’s one reporting to three, and there’s one reporting to only two. It could be different departments. It could be radiology versus surgery. I don’t know what’s going on with this borrower’s life. You need to know that sometimes it appears that there is no rhyme or reason between the reporting practices of what would appear to be the same lender or the same institution like Intermountain Healthcare. There are no public records, so we don’t need to go into any details there. This is a negative account for a tradeline. These were all revolving. These are collections. If liens, judgments or bankruptcies were present on this, there would be another line and it would show public records and list them all.
Once again, they’re showing the same FICO eight. FICO eight score is the most widely used FICO version. This is a little deceptive because this is the marketing version. FICO score eight is purchased literally by hundreds and hundreds of financial institutions as their marketing or their goodwill score. It’s that FICO-FAKO score that we’ve talked about in previous episodes and in my book. The thing is they are saying it is the most widely used FICO score version, but this one is technically the most widely used because it’s the marketing score. When I was back at FICO World, there is no count as to how many institutions use 5, 4, 2, how many use eight and how many are using nine. They are not willing to share that information, but they are saying that this unweighted score, this FICO-FAKO score is the most widely used score version.
This is important. We’re going to be taking a look at the factors. These are the up arrow or down arrow that I talk about with my team, students and clients when I’m training them in bootcamps, etc. Your factors are giving you big positives and big negatives. It’s the 1,000-foot view of your profile. You have an established credit history, but notice down later, it says that you have not established a long revolving account history. What they’re saying is, “You got something.” This is only recorded. Do you remember how I talked about FICO 40? You’re going to know some of these designations here little by little because the FICO 40 is different. There’s 38 in one bureau and 41 or 42 in another bureau. They use different ones because they have different original metrics. FICO eight software version has brought them all into one. The established history is the same across all three bureaus, but only TransUnion counts is where you’re having a history.
This means it doesn’t matter. There are no data points, but your oldest account was open five years, four months. Six months from this date, it’s going to go past that six years, which is a very important date when it comes to the aging metrics for your accounts. Remember, it’s 2, 3, 6, 11 and 25 years. The oldest account has been open for that long. The average age of accounts is three years and two months. At the time of this credit report, it barely had topped that average age and had gone over that three-year mark. That was a significant boost to this borrower’s profile. You’ve been paying your bills on time. That’s an Equifax metric and an Experian metric, but it’s not a TransUnion metric. Are you starting to learn the patterns here? You’re most recent missed payment happened three and a half years ago. It’s not a metric covered by TransUnion. Once again, we’re looking at how the different bureaus are comparing different pieces and they’re calling recent within three years, six months. That’s 41 months at this point.
It’s important to realize that we don’t go by score because each one of these bureaus is having different scores and different modeling. We want to build a perfect fundable profile and the scores will follow. All over the place, there are different measurements by the different bureaus. The first down arrow is across all three reports. You have serious delinquency or derogatory indicator or public record and/or collection on your credit report. We know this borrower has collections and late pays or charge offs. It’s across all three. The number of accounts that were over 60 days late or worse, a significant derogatory account is 60 days. They’re not saying here in this overview what’s 30 days late. In the details, they’ll show but they’re saying 60 or later is a serious indicator spectrum.
The direct answer to my question, what is a serious delinquency? Everybody at FICO told me 90 days. At the exact same time, they’re calling this 60 days late or worse. There are mixed messages there. They’ve told me 90 days or older is a serious delinquency and yet they’re measuring 60 days or more in the big picture. How many collections do you have? There were three collections on Equifax, but five on the other two. There’s differentiation on that. Make heavy use of your available credit that checks out on all three. The ratio of your revolving balances to your credit limits, it’s 80%. That is revolving balances. As it set up here, we’re only counting revolving utilization for these major metrics.
You have a public record or collection. This is different than serious delinquency. This has a serious delinquency. These two definitely have public records or collections. They’re counting those collections. Equifax doesn’t use this indicator. Your most recent collection occurred eight months ago. It’s irrelevant for the purposes of Equifax. Once again, we learn different uses of these data points and FICO has brought them all together into one valuation of the health of your profile. You have a short credit history on both Equifax and Experian, but TransUnion says that you have an established credit history. It’s the only one. That’s how they give them credit. It’s totally hilarious how one cast it in a positive light and gives it an up arrow while the other two give it a down arrow. The oldest account is five years, four months. The average age of your account, it’s the same thing. Those were done up, the data is the same but they’re evaluating it separately.
This one’s in positive terms. You have established credit, even though it’s not long. These guys are knocking this borrower for having a short history. The next one was you have too many credit accounts with balances and that’s only being counted by Equifax, the number of accounts reporting a balance nine. TransUnion and Experian do not use that metric. As you go through yours, there are positive counts, both positive revolving and positive installment. There are negative revolving, negative installment and collection. I’ve tried to get a report that was representative of the biggest possible scope. You may have a similar profile, but you may have fifteen years of history. I’m giving you the best analysis that we can, given there are 40 characteristics that they’re measuring.Different auto scores have different metrics. Click To Tweet
That was the factors. Let’s go and do the ingredients. Here’s the payment history. These are the five areas, your payment history. This is what FICO preaches all over its websites and everywhere you see it. They’re couching all this to match what they share out there. These are not all the fundability metrics, but I want to go over them. There’s payment history, amount of debt, credit history length, credit mix and amount of new credit. Those are the five. We’ll go through them in order. Late payments, 30 days or more, three 60 days or more, derogatory public records, none. Collections, we saw that there was a differential in those up above when we looked at it. They sync up. Yours may not sync up. Those are some of the data points that we want to make sure are legitimate. We’ve got to make sure that we’re reporting similar across all three bureaus.
Accounts always paid as agreed. 75% of this borrower’s accounts are paid as agreed. The amount of debt is fair, meaning compared to all of the indicators, she has $2,158 and the amount of debt is based on limits. Accounts with balances, this includes good credit and bad credit. It also includes revolving accounts and installment loans. The total balance on revolving is an open-ended debt. The open-ended debt is $2,152. It’s only fair instead of good, excellent or otherwise. The total balance is 2158. That’s 80% utilization and 80% utilization is no bueno. It’s not poor. I believe 90% or higher would track a poor, but we want to be in excellent. Without being a client or being in my system, we tell everybody 7% on the reporting date.
The credit length history is fair. The oldest account is five. We need the average age to be over six. Good to excellent average age is going to be over six and the oldest account is over eleven. Usually, we want no accounts under two years old. Preferably, when you are fully optimized, we want no new open revolving accounts under the age of six years. Every 24 months, we would like to engage a new installment loan. You’ve got to go to our installment loan section and the podcast to review some of the information there and see what those parameters are. We deep dive into that both in my book and the bootcamp.
The amount of new credit, this is very good. She has zero, good is one. Even two inquiries and those recent inquiries count within the last 90 days. Good is 1 to 2 inquiries. Very good is zero inquiries in the most recent. The age of the most recently opened account, this borrower has ten months aging. We don’t want anything under 24 months on the revolving account side. We want to grow that all the way to six years. We want a new installment loan every 24 months, where possible. Let’s consider her credit mix. Her credit mix is very good. The next one after very good is excellent. She has three revolving accounts. The perfect profile is 3 to 5. She has installment loans, including mortgages that are a total of nine. That installment loans are auto loans, however many auto loans as well as student loans, and bank-issued credit card accounts. Remember how I said in previous episodes that the bank-issued credit cards are your higher value cards. These are not retail or merchant or finance company cards. The revolving accounts she has have been from banks.
In the next section is your risk rate. Her risk is 25%. If you’re in the 800, you’re going to be in the 1%. They never have a 0% risk. It’s 850 across all three bureaus. An auto loan is at 895 credit scores because they go from 250 to 900. You’re still going to have 1% of risk, but she’s at a 25% risk ratio, which is orange, then it goes to red. They don’t take their risk very lightly. To see through the illusion of this, you need to read the chapter in my book about how the credit scores are designed to make lenders money at the average borrower, that 700 to 710. You need to check out that chapter in my book and the corresponding podcast in this series. The 25% is orange on its way to red and there’s dark green, light green, yellow, orange and red.
We’re going to check at the score
Bank Card Scores
s by version. We are going to check across all three bureaus in some instances, but we wanted to look at the versions. Notice that FICO auto score eight, we have 605, 612 and 628. When we go to 5, 4 and 2, we have 613, 602, 592. Notice 605 to 613, 612 to 602 and 592 to 628. Experian is the largest jump. Notice that the two switched, the 602 and 613, flipflop. We’re back at 605 and 612. Different auto scores have different metrics. To quote my partner, “Older scores are dumber,” says Brad. It couldn’t be closer to the truth because they have hundreds of millions of more data sets to examine and compare for predictive analytic purposes. Let’s pay attention to what they’re measuring. FICO score eight, you have serious indicators across all three. You have a short credit history. Remember, it said that on Equifax, but it’s not saying that here, which means that the borrower’s auto score is saying that it is a long enough history under Experian for the autos.
If we go to the next one, you have a short credit history experience and 5, 4, 2 says, “It’s not long enough.” Do you notice how they’re evaluating different criteria between the bureaus? All you want to do is compare and contrast the various auto score 8, 5, 4, 2 and 9. Short history, missed payments, heavy use of revolving at 80%, not established a long revolving history. This is an auto loan score, but in FICO eight, they’re evaluating revolving account history. There is crossover even though this is a weighted score. Let’s go to the next one and notice there is no indicator corresponding to it. “You have not established a long revolving history,” it says. There is no version that says you have not established a long revolving history. This one does say that you’ve got derogatory, you’ve got a short history, a recent public record. You’ve made heavy use and missed payments. Those are three versions of missed payments. These two are from different bureaus.
What I need you to understand is if you want a copy of the FICO 150, all you have to do is go to GetFundableBehaviors.com. Tell us where to send all of these behaviors because I’m going to show you 150 of these all in one place. These are like paints to paint with. There’s a pallet of 150. These are the ones that applied to this borrower and which auto scores and versions apply to this borrower. Let’s go to the next one. This is auto score nine. We’ve got 611, 594 and 602. We’ve got 613. We have 611, but now 594 to 602. We’ve got a little bit of range in between all of these. Each one of them have their version across the reporting metrics of all three bureaus. Not enough established history is used by all three in FICO nine where an established revolving account history is not used in 5, 4, 2. It is used in FICO score eight. There are some crazy variances and this is FICO testing every version to create predictability.
Let’s go to the bankcard scores. None of them are very far off the mark. We had the 602s, 594s, etc., but the bankcard scores are closer. We had twenty-point differences in a couple of 592 to 628, we have some huge differences over on the Experian. When you get down into the credit cards, we’re back to a four-point difference. This four-point difference indicates that the data and the behaviors of these revolving accounts are more parallel. We have all of the negative indicators. This borrower has negative indicators across all of these. What I want you to understand is that these negative indicators are written differently than the ones you’re going to get from the GetFundableBehaviors.com. Those are the secret behaviors. When I say secret, they’re secret from borrowers. Lenders have these for decades.
These secret behaviors are going to show you that this is not necessarily the language that is officially used by the lenders. They’re dumbing it down. They’re making it simpler. They’re making it more comprehensible, but this is not the language or the recent codes and behavior indicators on the FICO document that we’ll send to you. We had the bankcard score eight and the bankcard score 542. There’s a random Experian three that is used for bankcard scores.
I tell a story in my book about a Wells Fargo underwriter who shared with us the metrics. He totally saw the use of the marketing scores, the FICO-FAKO score. They would mark it and they would send things that say your score is blank, 720. They would send as a notice doing marketing and doing a solid to the borrower. When they pulled the report, Wells Fargo, at least in Southern California was pulling FICO score three to do the deal. That FICO score three could be dozens of points lower. That got under the skin of this one Wells Fargo employee because he’s like, “We’re marketing and sending out, ‘Here’s your monthly score. By the way, this score may be good enough to get you qualified for the best interest on an auto loan.’”
They go pull it and they pull some random. This is the most ancient of all the scores. It even says, “FICO bankcard scores are widely used in credit card lending.” It says it generically. It doesn’t say this bankcard score says, “Bankcard scores are widely used in credit card lending.” It comes down here and says, “These previous score versions are widely used in credit card lending.” It comes down to three and it says, “FICO score three is commonly used in credit card lending.” Notice how unspecific this language is. That’s not the worst of it. These previous scores show the same derogatory delinquencies, collections, heavy use, past due amounts and collections. This is revolving credit it’s talking about and they’re only on Experian. Experian pulls this file. Equifax and TransUnion do not use the equivalent of a FICO score three.Fundability means if you are able to remove some things and not other things, you can still have an optimized profile. Click To Tweet
Let’s now hit bank score nine and scores are similar across the board. All the indicators are here because FICO score nine is bringing all of these scores into one and creating a homogeneity. They’re creating uniformity between all three of the bureaus, Equifax, TransUnion and Experian. That is not the case when you look up at any of the other scores like FICO 5, 4 and 2. FICO eight is all over the place in the different indicators. When you get down to FICO nine, it has every one of them across the board. There’s a synthesizing going on as each new iteration and new software version comes out. They’re creating more and more clarity.
How To Read The Accounts
Let’s go into the accounts. I’m going to tell you how to read several different accounts. If there is a green automobile, this means that it’s an installment loan and not a mortgage. This borrower doesn’t have a mortgage. If it has a house, it’s a real estate back. Sometimes mortgages are listed like a home equity line of credit or a HELOC. It could be listed as a mortgage on some bureaus and on other bureaus as a line of credit. It could show a revolving account for our mortgage. You’ve got to know the definitions and know what they’re looking for so we can accurately reflect what it is they’re measuring.
If it’s an auto loan, this is not just autos, but it’s all personal loans. It’s all non-mortgage. If it’s green, that means it pays its account as agreed. It’s paid or paying as agreed. This account is in good standing. Each one of the bureaus says it differently, “Pays account as agreed, paid or pays account as agreed, this account is in good standing.” These are different languages based on bureaus. This is Ally Financial. This is an auto loan, a vehicle loan. There are no delinquencies. No information is bad information. The coaching for this client would be to make sure that it’s saying that none reported across all three. No update received means that they don’t know.
Remember there are credit reporting bureaus and data credit scoring. For belts and suspenders case, where possible, I want there to be no material differences. Here, the words are different, but there are no material differences. It says, “Worst delinquency, none was reported.” The other, “No update was received.” We don’t know whether or not they’re counting that against you. The balance is $24,947. There is no credit limit because it is an auto loan. We’ll get a little bit further. Revolving accounts, we’ll see this differently. There’s your first evidence of the 24-month lookback period, a two-year payment history. This is a rolling two years for FICO reports or it will be the most recent two years from the date it was closed.
If you have one that says, “Closed in 2015,” it will go from 2013 to 2015 in arrears. It’s 24 months. This one was engaged in January of 2019 and it’s got all of the right things. “Not reported,” means that it has not been reported yet as of the date of this report. This date was September. Experian will always be ahead one month in its reporting date. Do not freak out if you find that there are different balances sometimes, etc. If there are significant changes month over month on a particular account, Experian may be reporting 30 days before Equifax and TransUnion are reporting. This varies by borrower.
There’s not a universal way to say it. Many of you will find that one of the bureaus is ahead of the other. I can neither confirm nor deny that it’s always Experian. There’s the 24-month lookback period. Here’s what it’s saying, “Not reported, not open.” Here is the legend for how to interpret those accounts. Here are the more salient details. This is the open date. We want to make sure that our open dates are all the same. The credit report is September. Here, it’s not saying that there’s any activity. That’s something to check. The terms is 75 months. TransUnion doesn’t necessarily report the terms of an installment loan, which a vehicle loan falls in.
Scheduled payment and the balance. This is the high balance. A high balance means what was the loan amount. For installment loans and for revolving accounts, it means what’s the high-water mark? If you have a $30,000 credit limit and you use in this case $27,144, they’re going to keep that there. You never want your high balance mark to ever be more than 38% of your balance. This is an installment loan so high balance is the loan amount. It was a vehicle loan. It is a joint responsibility between the borrower and another person. The company name is Ally Financial. The contact information for this particular lender will be found down in the contact information. You can write them or you can call them so that you can do whatever dispute or otherwise. It’s handy to be able to get that information as much as possible.
That is the analysis of a true auto loan, an installment loan that is green, that is in good shape. Here’s America First closed. “Closed,” always shows as the indicator. We can look at all the information. It’s, “Pays account as agreed,” but notice that this went to two months in advance or two months faster than TransUnion and one month faster than Equifax. You’ve got to make sure that you understand where your account. This has to do with the reporting date and the day you pull the credit report, etc. This credit report when you pull it, it is doing the analysis as of that moment. Based on how fastidious you are, you can find out when all of your accounts have reported for the month and then pull your credit report after that.
One is showing that there was a close date. It’s not showing it was closed on that. I would recommend that you make sure that it’s reporting a close date across all three. It’s saying that it was positive. It’s closed, but we don’t want to have any confusion as to what that looks like. We would like to have that closed date. The open date is the same across all of them and the last activity. The terms was a twelve-month loan and it was a joint account. That was a twelve-month loan and it was another loan type. It could have been a motorcycle, a personal loan, etc. Account number, there’s non-listed and here’s your contact information, etc. It says, “Account closed to consumer’s request.” If you’re going to have a closed account on your profile, that’s the indicator we want. We do not want where it says, “Account closed by a credit grantor.” If it says that, that is a negative indicator.
If you’re a lender, you’re reviewing a credit profile and it says, “This account was closed by credit grantor,” you’re like, “I don’t know what happened. Did they charge it up? Did they mess with it? What’s wrong with this borrower?” FICO and lending software, if it’s closed by credit grantor, it’s no bueno. This one we like. This one is solid. Let’s look at a negative indicator. This one is a credit card that was charged off. Pay attention again, the language is different, “Charged off as bad debt. Unpaid balance reported as a loss by credit grantor.” You can’t get more different than that even though they’re all the same. This one says it’s 120 days past due, “None reported, no worst delinquency charge off or other derogatory.” For any account that is reported differently, we don’t get into credit disputes. We certainly recommend that you enforce your legal rights.
We don’t have a disputing strategy that is designed to have legal and lawful items removed from your credit profile. You do have the right to only have legal and lawful items reported to your profile. What that means is if there are any errors, if there are any inaccuracies or if there is something that’s not verifiable, those have the right to come off. If there’s something in error, inaccurate or not verifiable, please exercise your rights under the Fair Credit Reporting Act and feel free to dispute. Be very careful about using third parties credit repair companies to do this stuff for you. I come from Lexington. I know credit repair inside and out. You don’t want to have the things on your credit profile that are going to interrupt your fundability.
Fundability means that if you are able to remove some things and you’re not able to remove other things, you can still have an optimized profile. That’s part and parcel of what this is all about. We can have an optimized profile. That’s why I don’t spend a lot of time on credit repair activities. It’s nonsensical in most cases. Notice that the balances and the credit limits are the same. This is where you see your credit limits. The current balance over the credit limits is 95% utilization. That’s what it got charged off as. TransUnion isn’t rating it at all because it was charged off. It’s account non grata, like persona non grata.Older scores are dumber. Click To Tweet
Experian has been counting it as a charge off for this entire time, all of 2019, 2018, etc. You want a charge off. This is an advanced strategy, but some of you may run into something where it continues to show 120 or 180 days late, but up above it says, “Account charged off.” You’ve got to reconcile those things because the date that this will fall off your credit profile over time is based on the charge-off date plus six months. You have got to find out what those dates are and you can’t have what we call a rolling 30, rolling 60, rolling 90, where it keeps reporting the same derogatory account over and over. Legally it’s been charged off, but they’re not reporting it accurately. That’s an advanced strategy to be aware of.
Here are the earlier versions of when it got charged off. Notice, there is data for the times that they have been 90 days late or more. The question becomes, do these all reconciled? There’s an 8, 7, 6, 5, 4, 3, 2, 1, 12, 11, 10, 9, 8. You’re looking for accuracy in your data. This is saying, “It’s 90 days late.” This is that rolling that I was telling you about. TransUnion said it’s charged off. It’s legit. It’s gone. This one is saying it was closed on a particular date, on the date that it was charged off. These are not showing charged off. They’re showing that these are rolling late. That’s not okay. Your credit profile doesn’t age. You don’t get 24 months lookback period helping you for both Experian and Equifax. This is common if this is happening to you.
These dates are extending your 24-month lookback period further and further. Whereas TransUnion has written it off and that’s a close date and then traction after that. There are strategies to do. This is not to review disputes. I’m trying to explain what to watch for. It isn’t about disputing. This is a phone call to your creditor, not writing a dispute letter to the bureaus. This is calling the creditor and saying, “You guys charged this off. Why are you continuing to say that it’s 90 days late?” It’s super important. Your open dates, date of last activity, this is even saying the date of last activity was 5 of 2015. It says 7 of 2015, but it doesn’t reconcile up here. It’s saying on this very bureau that they’re still late.
Those are the things you’ve got to watch for and now you can at least tell what’s happening. Term, these guys don’t have an indicator. This one is calling it revolving high balance. It’s a credit card, individual account in Bank of America. This one was closed at credit grantors request. This is not an indicator, but it was charged off. This is going to be the indicator, but this is not good. Besides the charge off, this wards off any new credit and new opportunities. It gets in our way over time. There are more cards. We’ve got positive cards. That’s where you see the credit card as green and it’s a credit card. All those same indicators are all in there.
Once again, Experian is ahead of the reporting game. The last activity, revolving. Everything seems to be in order, but this is all the things that you can find. It says Citi Card CBNA, but when we were looking at the inquiries, they had inquiries from two different versions of that institution. When the names are different and they pull two inquiries, they may be pulling one and then they’re referring it to a different version like unsecured versus secure division or a lower value credit offering. There may be different divisions and hence two credit pulls may be required based on the results of the first credit pull. Everything else comes into play here. Experian is two months ahead in reporting or better said, TransUnion and Equifax are two months behind as of this reporting date.
Let’s pay attention to some of the derogs. I want to get down to the derogatory accounts. These are the collections. This is the indicator for a collection account. You saw what it looks like. It’s red auto for installment loans or red credit card for bad credit cards. When you’re evaluating your credit profile, what you want to look for is who the original lender is. On these collection accounts, who’s the collection agency? Hence, the agency name. Is the same date assigned? What is the original balance on this? It says, “Paid on Equifax.” It says payment after charge off is TransUnion. Experian says paid account was a collection account, insurance claim, government claim or was terminated for default. Experian has quite the description.
Comcast is a service provider. We don’t recommend Experian boost. We don’t recommend using small non-lender tradelines or accounts to be reported to help you build your score. We’re not interested in your score. We’re interested in fundability. Unless you have Experian boost, Comcast is probably going to be on here only in case there’s a collection as in this case with this borrower. You want to find out when the date of last delinquency is because the date of last delinquency is also going to indicate when it’s going to ultimately fall off. If everything’s accurate and you don’t dispute it, it will fall off seven years after the date of filing or 90 months after the date of last delinquency. You need to look up what those are. Intermountain Healthcare is only reporting as we learned up in the collection section. Intermountain Healthcare is who the vendor was. IC System is the one who’s doing the collecting. Everything looks to be the same. It’s not being reported to Equifax. Hence, that’s one of the contributions as to why there’s a range in scores.
Finally, here’s another view of our inquiries. There are no inquiries under Equifax and TransUnion except for an older one. Experian had all of them and that was the extra hit. That’s what’s in our way because this borrower isn’t looking at all three bureaus to pull credit from, but only those that are using Experian. We’re going to get denials because there are too many inquiries if they continue to pull from Experian. Let’s take a look at the personal information. We’ve redacted some of these. Under the name, it was her first middle initial and last name across all three. She got lucky there, but one under TransUnion had her last, first, and middle. The former names, nobody fills out a credit application with last, first or middle.
Many times, the data is transposed in data entry. If you do a paper application and you fill out that paper application, they may ask for our first, middle, and last. We enter it wrong or the transposition happens incorrectly in data entry. We end up with a completely extra identity. The date of birth, we pulled that out, but those were all the same as were the Social Security numbers. What you’re going to be looking for in your address, this address was the same across all three. The move in date was 10/1/17, 9/1/17 versus 10/1/17. Experian shows 12/10/18, a full fourteen months later. This is not okay because here’s what happens and you need to know this. There are worst versions of this. You’ve got to go with me on this one. There can be 5 or 10-year differences between here, but there’s a year difference.
Let’s say that this individual is filling out a business line of credit, a credit application and she puts in, “I’ve been here since nine of 2017.” As this borrower has been getting, they pull an Experian credit report and Experian says, “Hold it. My record, say it’s 12 of 2018 but the borrower wrote down 9 of 2017.” That is a red flag enough to get your application denied. When you are looking up myFICO.com credit report, look at that date. That date starts your longevity points. For however long you’re at your address or any address you get points for being there. For all intents and purposes, the anecdotal evidence that we have, it’s the same 2, 3, 6, 11 and 25 years.
If we’re in 2019 and she’s been there for two years, this would only be one year. She wouldn’t even get the longevity points. Things you’ve got to watch for, here is 11 of ‘17, 3 of ‘17 and 11 of ‘17 at the previous address. Notice this one doesn’t even sink up. There’s nothing reported for TransUnion. Equifax says St. George, but Experian says Sandy, Utah. Every one of these things are important for us to evaluate. Here’s one thing that is crazy important. We have 2014. This is like genealogy. These are all timestamps, 2014, we’re getting closer to the future, 2015, absolutely, 2017, yes and then we go back in time to a previous address. This is a huge red flag, especially on this Equifax report.
We’re going to be looking at this same borrower through the eyes of the Equifax report, TransUnion report and the Experian consumer disclosure files. I want you to know how to look at your myFICO credit reports, the advanced versions of the FICO report. The final thing is that the current phone number and previous phone numbers are rarely if ever listed on myFICO. There will be a grip of them for most borrowers on their consumer disclosure files. We’re giving it away, this was one of my team member’s. Credit Sense is misspelled, but the date is correct and the previous employer here is correct. There is no employer under Equifax.
Each one of these is important for us to establish the right protocols to list your W-2 if you’re W-2 or you’re QFE, Qualified Funding Entity. If you are one of my clients or students, we need to sync all of these up so that they are together. Credit Sense should be spelled correctly across all three bureaus and/or the person’s QFE. Every one of my team members, when they join my team, we start out building their personal profile. I want to thank my team member for letting me share her before. Maybe one of these days, we’ll share her after. That is the analysis and the rundown and review of what it takes for you to interpret your myFICO credit report so that we can build a fundable profile. This is not your profile. This is the report of your profile. We need to sync all of those up. We will see you next time.
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