Bucketing, Rebucketing and credit scores

You may have expected that that Fico would evaluate people solely on the basis of their credit file, but this is not the case. What Fico actually does is to compare you to people with similar credit standing to yours. Thus, your credit is now evaluated differently as you move from one category to another, and your score may change suddenly without anything actually changing in your credit.

The change can be either positive or negative. It’s not unheard of for people to loose or gain up to 80 points over nigh just because they had moved to a different category. When

Rebucketing simply means that you have been moved from one category to another. myFico customers often receive the following message when this happens:

“You moved from one category of credit users to another as time passed. For example, you may have transitioned from the category ‘consumers with a new credit history’ to the category ‘consumers with a two-to-five-year credit history’. As a result, your credit report is evaluated differently, causing a slight change in your score. The good news is that moving between categories like this usually offers you the potential to reach a higher FICO score in the future”

The bucketing system works out more to the benefit of those with a few derogatory items or very little to no history than it does them harm.

Without it, folks with long established credit history would have the whole top half of the score numbers scale absolutely locked up tight for themselves, leaving the bottom half to those with past derogatory items or short credit history, which would have been stuck there for 10 to 20 years.

By assigning a better score to some individuals compared to others in the same category, potential lenders can figure out which of the new-credit individuals are likely to do better and better and are not as likely to default.

The categories tend to split out according to:

• Length of credit history
• Thickness of file (number of accounts)
• Presence of a new account
• Presence of seriously negative payment history
  (90+ days late, charge off, etc.)