What is FICO bucketing : Bad Credit Advisor

What is FICO bucketing

Q: My credit score went down 35 points on average with all three credit bureaus. My credit union rep said that I got few late payments and probably got dropped into negative credit bucket. What are the credit buckets? It is bad enough as I am trying to refinance.

A: FICO buckets are used to group consumers with similar profiles and credit histories together. Basically it is done so FICO algorithm compares apples with apples, not apples with oranges. While FICO scoring formula takes into account many variables, bucketing concept makes sure that consumers with similar variables, e.g, length of credit history, revolving utilization, number of late payments, number of collections, are compared against each other. Thus you are not compared with someone who is way out of your league, in positive or negative sense.

There are several buckets, but seems that every expert I read, does not know for sure the exact buckets but two negative ones. The first one for serious derogatory records including 90-day or more late payments, a charge-off, a collection, a 60-day late that is less than 2 years old. The second is for public records such as bankruptcies, wage garnishments, foreclosures, tax liens. If you have both, a public record and a derogatory record from the first bucket, you are likely to go to the second.

There are many things about FICO bucketing that literally no one knows, save people who invented and implemented this concept. You should worry about those late payments and see if you can disputed them. If not only time will move you back to a better bucket. Concentrate on self credit repair. For more information, you can try FICO forums.

Tue Oct 13, 2009 09:10AM by Tony | More in Credit Bureaus | Comments (0)

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