How Secret Score Cards Affect Credit

So you thought you knew everything you needed to do to improve your credit score. Do you know what score card you're on?

Credit Score
Credit Score

When it comes to credit scores, you may not realize the importance of your peers. Scoring models compare you with other consumers with similar credit profiles rather than everyone with a credit score.

That's right. There isn't just one formula that spits out a score for all consumers. "Within any scoring model are a series of scoring models. Each of those scoring models is called a score card," says John Ulzheimer, CNBC contributor and president of consumer education for San Francisco-based, "and a score card is designed to predict risk on a homogeneous population."

Previous editions of the FICO Classic scoring model used 10 score cards, and its newest version has 12 for more granular segmentation.

Some of the FICO score cards include those for "thin files," or reports with few accounts; those for people with bankruptcies; derogatory items but no bankruptcies; and those with a clean, lengthy credit history, according to Ulzheimer. FICO doesn't disclose a complete list of score cards.

Different score cards emphasize some variables over others, which is why any given change to a credit report doesn't cost or add a set number of points. "An inquiry is not worth the same number of points for a young consumer as it is for someone who's had credit for 30 years," says Ulzheimer, also a former manager at FICO.

The major factors that make up a score still apply in every score card, though. Payment history and revolving debt levels, for example, remain important.

Score card hopping
When changes to your credit report prompt a score card move, known in the industry as "score card hopping," it can cause significant credit score fluctuation -- sometimes in a counterintuitive direction.

More Stories from


For instance, if you had a good score for someone with a bankruptcy on file, the score could drop once the bankruptcy comes off the report and you are pushed on to a new score card. At that point, your credit might not look so stellar compared with everyone else in your group.

"The analogy that I always use: It's like going from the low-level reading group back in elementary school to the medium-level reading group," says Barry Paperno, consumer operations manager at FICO, the Minneapolis-based company that created the FICO score. "You basically went from being at the top of that low group to the bottom of that higher group."

It can prove difficult, if not impossible in most circumstances, to recognize score card changes. Consumers aren't told of shifts within a group or to a new one. What's more, some triggers can be very subtle, such as credit card accounts reaching a certain age.

Certain actions, however, will cause a score card hop, according to Ulzheimer. Filing for bankruptcy would throw you onto the bankruptcy score card, for example. A collection hitting a clean credit report would land you on a derogatory score card. Conversely, a credit report left spotless once negative information came off would land the consumer on a clean-file score card.

Not all score cards allow perfect credit score
FICO scores run from 300 to 850, but each score card has its own range. Some have lower maximum scores. "An example that would make sense is if you're in the score card with folks who have had bankruptcies and repos. You're not going to be able to get an 850," says Paperno.

People who are new to credit are also excluded from the elusive 850. "Same thing with a young, thin file," says Paperno. "That person could have a very good score, but they're not going to be able to get the highest score possible for all the score cards."

What to do
The good news is, you don't need a perfect credit score, or a score card that allows it, to qualify for the lowest rates. A FICO score of 760 should get the same results that an 850 would.

To raise your score, maintain good credit habits. Pay bills on time, keep credit card debt very low, let accounts age and apply for credit sparingly. Stagger free credit reports so that you obtain a different one every four months through, and dispute errors found on your credit report.