Why is my credit score above 9000? Does that mean that I’m reeeally good with my credit activity? Well, no—it doesn’t mean that at all, actually. But on the other hand, it may not mean that you’re bad with your credit activity either. Regardless, a lot of us have the same questions, and the answers are not easy to find. Whether you’re reading this as a lender, borrower, or simply a curious consumer, let’s talk about what it does mean for you.
Risk Factor Codes
With some quick research, you can find that there are multiple spectrums for valid FICO scores. Typically valid scores will fall on a spectrum of 300 to 850 or 250 to 900, depending on the model used. Most Americans will have a credit score that falls nicely in this spectrum. However, there are other scores that lie outside of this range that are not erroneous. A consumer may receive a score above 9000 or a straight zero, as previously stated. These scores are sometimes referred to as “risk factor codes” (a consumer receiving this kind of code will also be known as a thin file, which is another designation for lacking credit history). Like any good code, there is a translation and meaning behind the number. Below are some common risk factor codes that we receive at Visible Equity and their associated reasonings.
What types of consumers are pulling these scores? As long as you are a living, breathing human being, you shouldn’t see code 9001 attached to your name. You could probably guess, but these codes will often be the resulting case for immigrants and young Americans. Young people coming out of high school, for example, may not have any established credit, nor would an immigrant who is new to the US. There’s no hard and fast rule, though. Depending on consumer behavior, a score of 9002 or 9003 could report at virtually any point of a consumer’s lifecycle.
A consumer may receive a 9999 score if they have closed accounts to their name, OR have accounts in collections, while only having two or fewer active tradelines for a credit bureau to evaluate. In other words, the consumer’s credit history is also a bit too lacking to pull a valid score. There’s definitely quite a bit of similarity between these risk factor codes (that is, apart from the deceased status). Sufficeth to say that if a consumer reports any of these scores it is because something is lacking in their credit activity.
Thin File Scores and Visible Equity
How do these scores fit into the Visible Equity world? It is important to note two things, (1) any loan with a borrower who holds one of these risk factor codes as their credit score is referred to as a No Score in our system, and (2) Visible Equity uses a FICO spectrum between 250-900. Any credit score that falls within this range will be valid in our system. The No Score loans can be reported separately (as their own tier, so to speak) from other credit score tiers. More importantly, No Score loans are separated from loans that show that the credit score is Not Reported (missing data or otherwise invalid). It is not necessary to differentiate between 9000-range scores, and most Visible Equity clients do not. In most cases, clients receiving these scores from credit reports will report the thin file score as a zero in their core system.
While it is not so important to differentiate between thin file scores, it is crucial to differentiate between the No Score and Not Reported groups. Doing so allows institutions to treat these loans differently. The No Score loans have borrowers with accurate credit reports that lack sufficient data for credit bureau analysis. That status will likely change within a six-month period, and the borrower will have a valid score soon enough. The Not Reported loan group, however, is simply missing data. These loans are more actionable for a Visible Equity client, as they can be isolated and researched to (A) determine why the credit score is missing or invalid, and (B) provide Visible Equity with corrected data, if available.
In Visible Equity’s Calculation Settings, the default setting in place reports these No Scores separately from the Not Reported scores. Our recommendation would be to keep this default setting in place. However, if you’d prefer to combine these together in one bucket, the setting can be changed. For Visible Equity clients, contact our client success team directly to verify or adjust the setting for your portfolio.