Each credit score model consists of multiple Scorecards that assess distinct aspects of an individual’s credit profile. The points assigned by these Scorecards collectively determine the overall credit score. Typically, each model includes between 8 to 12 Scorecards, which categorize consumers into different segments. Based on a consumer’s actions, changes to the credit report may result in a transition between Scorecards. Since credit reports can update daily, it is possible for an individual to switch Scorecards frequently. Additionally, certain actions intended to improve a credit score may inadvertently cause a shift to a Scorecard that could result in a lower score.
Scorecards are categorized in two diverse ways:
1. Clean Scorecards (no serious delinquencies
2.Dirty Scorecards (those with serious delinquent payments, collections, charged off accounts, bankruptcies.
The goal is, of course, to be at the top of a clean Scorecard. To achieve this a consumer would have to have:
A. A “thick” file – meaning having numerous open and closed accounts.
B. A “mature” file – meaning have accounts with long histories.
C. No new accounts in the last 12 months
D. No delinquencies.
Suppose a borrower has an older collection account, which is the only negative item on their credit report. They manage to have this collection deleted, expecting their credit score to increase significantly. While this can often be the case, the extent of the score change depends on the overall composition of their credit report and which Scorecard they qualify for after the deletion.
If the borrower also has delinquent payments on other accounts, they may still be placed further down a less favorable Scorecard, even without the collection. Conversely, if this were their only derogatory mark but they carry high revolving balances, they might move from the top of a lower Scorecard to the bottom of a higher, cleaner Scorecard, which could potentially result in a slight decrease in their score.
For example, if the borrower then pays down or pays off their revolving debt but retains older delinquent payments, their score might regress from the higher, cleaner Scorecard back to a lower or
middle of a dirty Scorecard. This dynamic can create a cycle where improvements and setbacks
alternate, making the overall credit picture complex.
How can you determine if you have “hopped” Scorecards? The most important aspect is to review the
score factors listed under the credit score. These four or five factors are in order of importance, and
each one has a different point value. The combined points from these factors determine your credit
score and can fluctuate over time. For example, if today the primary score factor relates to a high
number of derogatory accounts, but during a future check it shifts to revolving balances being the
main factor, this indicates a scorecard change. Small shifts between scorecards can significantly
impact your credit score, either positively or negatively.
Each Scorecard has its own defined score range. Individuals with collections or recent delinquent
payments are unlikely to have high scores, resulting in narrower ranges on the less favorable (or
“dirty”) scorecards. Additionally, each credit bureau utilizes its own set of Scorecards for each model,
which can contribute to significant variations in scores across different bureaus.
The key point is not to become overly concerned with your current Scorecard. Over time, you will
progress through different scorecards. As long as you are consistently taking proactive steps to improve your credit score, you can ultimately achieve the highest or most favorable score.