Home > Credit Score > No Easy Answers to Credit Score Questions

Comments 1 Comment
Advertiser Disclosure


I know a lot of people get frustrated when they ask a seemingly simple question about their credit score and receive an answer that sounds evasive.  For example, how many points does a credit inquiry cost?  How many credit accounts should I have on my credit report to get the most points for that area?  What is the best credit card utilization percentage?

At first glance these seem like easy questions, yet the answer of “it depends” is oftentimes appropriate.  A big reason for the answer “it depends” is something called scorecard segmentation.

[Related article: Credit Score Reason Codes: What They Mean and Why You Should Care]

Many people assume that the FICO score or Vantage Score is a single scorecard on which everyone’s credit score is calculated.  This is a misunderstanding.  In reality, these credit scoring systems actually consist of multiple scorecards and your score is generated based on just one of them.

Which scorecard is selected and applied against your credit profile depends on a series of criteria or questions about your credit report. Typically, the first thing checked is whether your report shows any delinquencies, collection items or derogatory public records (a bankruptcy, for example).  If it does, your credit score will be generated on scorecards developed specifically for credit profiles with this type of information present. This technique actually helps increase the likelihood of getting a higher score for consumers with negative information on file.  All these profiles would likely score even lower if there was only one single scorecard—as they would look so much more risky compared to consumers with no negative information on file.

If there are no instances of not paying as agreed on your credit report, the scorecard to which your credit information will be applied is based on segmentation criteria that takes into account such factors as how recently you opened new credit, how many credit obligations you have, and recent credit activity.  The exact segmentation logic is based on a lot of statistical analysis of credit bureau data, and is typically not disclosed to consumer or lenders.

[Featured tool: Get your free Credit Report Card from Credit.com]

Why are you potentially being scored on a different scorecard than your spouse, parent, or neighbor?  Score card developers have found they can create a substantially more accurate and predictive scoring system when they group like segments of consumers together rather than grouping everyone into one single scorecard for the entire U.S. population.

The general credit behaviors that are predictive of risk (paying bills on time, keeping balances low and only seeking credit when needed) basically hold true across all the scorecards.  However, the exact weighting and point assignment of scorecard attributes for a segment of consumers who are active credit users versus, say, a segment of consumers with previous instances of not paying as agreed, can differ based on what the data analysis suggests.

For example, going from 2 to 3 inquiries may result in a loss of 7 points in the active credit user scorecard and 11 points in a scorecard for consumers with previous instances of not paying as agreed.   So, you see, the it depends answer is often the best response that can be provided to general questions about how a specific consumer activities or behaviors can affect a score.

To hear more about credit scores and credit scorecards, download Tom’s recent radio interview with Gerri Detweiler on Credit Talk Radio. Credit Talk Radio is streamed live from 2-3 PM Eastern Time (11-12 Pacific Time) every Friday.

 MP3 File

Image: Annie Pilon, via Flickr

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

  • Auto Loan After Bankruptcy

    If people keep bills paid and debt to available credit limits low they will be fine. if you have terrible credit it’ not the extra inquiry you need to worry about it’s the first two. Work on the basics!

Credit.com receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team