Credit Report Factor Codes

Code # Reason

1 - Amount owed on accounts is too high

2 - Level of delinquency on accounts

3 - Too few bank revolving accounts

3 - Proportion of loan balances to loan amounts is too high

4 - Too many bank or national revolving accounts

4 - Lack of recent installment loan information

5 - Too many accounts with balances

6 - Too many consumer finance company accounts

7 - Account payment history is too new to rate

8 - Too many inquiries last 12 months

9 - Too many accounts recently opened

10 - Proportion of balances to credit limits is too high on bank revolving or other revolving accounts

11 - Amount owed on revolving accounts is too high

12 - Length of time revolving accounts have been established

13 - Time since delinquency is too recent or unknown

14 - Length of time accounts have been established

15 - Lack of recent bank revolving information

16 - Lack of recent revolving account information

17 - No recent non-mortgage balance information

18 - Number of accounts with delinquency

19 - Too few accounts currently paid as agreed

19 - Date of last inquiry too recent

20 - Length of time since derogatory public record or collection is too short

21 - Amount past due on accounts

22 - Serious delinquency, derogatory public record, or collection filed

23 - Number of bank or national revolving accounts with balances

24 - No recent revolving balances

25 - Length of time installment loans have been established

26 - Number of revolving accounts

26 - Number of bank revolving or other revolving accounts

27 - Number of retail accounts

27 - Too few accounts currently paid as agreed

28 - Number of established accounts

28 - No recent bankcard balances

29 - Date of last inquiry too recent

30 - Time since most recent account opening is too short

31 - Too few accounts with recent payment information

31 - Amount owed on delinquency accounts

32 - Lack of recent installment loan information

33 - Proportion of loan balances to loan amounts is too high

34 - Amount owed on delinquent accounts

35 - Payments due on accounts

36 - Length of time open installment loans have been established

37 - Number of consumer finance company accounts established relative to length of consumer

finance history

38 - Serious delinquency, and public record or collection filed

39 - Serious delinquency

40 - Derogatory public record or collection filed

47 - Number of consumer finance company inquiries

97 - Lack of recent auto loan information

98 - Length of time consumer finance company loans have been established

98 - Lack of recent auto loan information

98 - Lack of recent auto finance loan information

99 - Lack of recent consumer finance company account information

When a lender requests a credit score, that score is computed by the credit reporting agency (Equifax, Experian, or Trans Union) based on data in your credit file, and the "secret formula" of the scoring model.

The score is shown on the credit report, along with one or more reason codes, ordered by their importance in arriving at the score. The reason codes may just be numbers that can be looked-up on a chart, or they may be numbers accompanied by the corresponding reason descriptions. Here's an example of a Beacon score of 711, with reason codes 14, 8, 9, and 30:

This information is compared to the credit performance of other consumers with similar histories and profiles.

As you can see, the descriptions with a typical score don't tell you much as a consumer. They are designed for the lender.

How Lenders Use the Reason Codes

In theory, the reason codes should call attention to areas on your credit report that should be studied further. In practice, the reason codes often are used just to make it easy for the lender to generate a letter of declination, complete with reasons, should you happen to fall below the lender's predefined cutoff.

Interestingly, the same lender might see the same four reason descriptions for a consumer having a much lower or higher score. The reason descriptions often merely provide hints as to what might be improved to get a higher score.

No Adverse Factors

One possible reason message is "No adverse factors" - but it is not often seen. That's because those who develop the scoring models don't know where the lender will place the cutoff points. A lender could have an extremely high standard, but reasons are necessary when an application is declined.

Reasons and the ECOA

According to the Equal Credit Opportunity Act, when declining credit, a lender can't just tell you "Your score wasn't high enough", or "You didn't meet our internal standards." A statement of specific reasons must be provided, or you must be advised of your right to demand specific reasons. Credit scoring helps the lender provide reasons.

Reason Messages and What They Mean

Reason Message

Explanation

Not all accounts paid as agreed.

Recent delinquency.

You had some late payments or defaults.

Recent late payments weigh more heavily.

Lack of recent information on auto loans or lack of auto loans.

Lack of recent information on revolving accounts.

Lack of recent information on bank or national accounts.

Lack of recent installment loan information.

No recent non-mortgage balances

Scores can be computed differently depending on the kind of credit you are seeking. For example, if you seek an auto loan, a score model that giving special weight to how you've handled auto loans might be used. Messages often indicate that the scoring model is not seeing recent activity in the category being evaluated.

Insufficient recent payment history.

Accounts not open long enough.

Loan balance too high, compared to original loan amount.

Credit scoring requires current information, as well as a history. New loans may not be help your score, because there is not enough history to see your repayment track record.

Number of accounts in total

Too few or too many. It's probably obvious which applies to you.

Too close to credit limit on revolving accounts.

Department stores often view this as an opportunity to increase your limit.

Recent legal filing or collection.

Derogatory public records.

Credit reporting agencies look at court house records - and this can affect your score. Transfer to a collection agency or collection account is also considered very derogatory.

Number of finance company accounts compared to length of finance history

Taking out multiple loans in a short period of time is a sign of trouble.

Your Beacon, FICO, and Empirica credit scores will almost always be different, even though the scoring models within each of them were jointly developed with Fair, Isaac and Co.

A major reason for the difference: Beacon relies on Equifax data, FICO relies on Experian data, and Empirica relies on Trans Union data. The three bureaus don't share information with one another. They have different ways of representing your data. They have different business customers making inquiries about you. Often, there are differences in which companies report to them. This results in scores that could be very different.

A Scoring Model for any Need

Trans Union's Empirica scores come many variations, each of which is different credit score for a different purpose. For example, there is a version for automobile financing, a version for installment loans, a version for bank cards, and a version for personal finance. The same applies to Experian's FICO scores and Equifax's Beacon scores. In addition to the generally available scoring models, many credit grantors have customized models for their own particular needs.

The Old and New Fico Score

From time to time, computation methods and weightings in a scoring model are updated, but many lenders want to stay with the old "algorithm", because they've built their decision rules over time and they aren't ready to change. So, for example, there's Empirica 95, and the current version of Empirica. There's Beacon 96, and the old version of Beacon. There's FICO and "classic FICO".