Adverse Action Codes Used by CRAs That Explain Consumer Credit Scores
 
Home Tell a Friend! Contact ICFE Link Exchange Search ICFE Subscribe ICFE About the ICFE
ICFE News Releases ICFE in the News Children and Money Financial Education Personal Financial Counseling with Paul S. Richard, RFC Credit Card Tips Credit File Correction Mending Spending Links and Resources Order Options

Adverse Action Codes Used by CRAs That Explain Consumer Credit Scores

San Diego, CA.  "Credit scoring has changed the credit industry dramatically. All three major credit reporting agencies (CRAs) utilize one of three credit scoring models. Experian uses Fair Isaac Version 2, Equifax uses Beacon 96/FICO and TransUnion uses Emperica/FICO. In 1999 Fair-Isaac Corporation (FICO) released the latest scoring model known as NextGen (next generation) in use by all three CRA's since 2001.

FICO, by far the leader in credit scoring boasts that as of April 6th, 2004 its credit services are used more than 750 times per second to make a credit decisions.

The adverse actions are steps a lender takes,  the use of codes, FICO says, are dubbed 'adverse action codes' by lenders because the codes help lenders explain to consumers why adverse action was taken ' why the application was turned down, but they still are somewhat of a mystery to consumers. 

All three CRAs list the four known 'Adverse Actions' on each credit report, which are intended to give the consumer an explanation and also illustrate the top four adverse conditions on their individual reports.  


Sometimes the codes may be four or five digits, always with the last two numbers being adverse code.  There are close to 40 adverse action codes, with many gaps in-between the numbers - which may be filled in as the need arises.

The FICO score is first calculated first and then the reason codes are deduced and added to the report 
to the lenders.

Here is a list of so called "Adverse Action" Codes and the Adverse Action Description:

Code-Description
01 Amount owed on accounts too high
02 Delinquency on accounts too high
03 Too few bank revolving accounts
04 Too many revolving accounts
05 Too many accounts with balances
06 Consumer finance accounts
07 Account payment history too new to rate
08 Too many recent account inquiries last 12 months
09 Too many accounts opened last 12 months
10 Proportion of balancesto credit limit too high
11 Amount owed on revolving accounts too high
12 Length of credit history too short
13 Time since delinquent too recent 
14 Length of time accounts have been established
15 Lack of recent bank revolving activity is short
16 Lack of recent revolving activity too short
17 No recent non-mortgage balance information
18 Number of accounts with delinquency
19 Too few accounts paid as agreed
20 Time since derogatory public record collection
21 Amount of past due on account
22 Serious delinquency, derogatory public records or collection
24 No recent revolving balances
28 Number of established accounts
30 Time since last account opening too short
31 Too few accounts with recent payment
32 Lack of recent installment loan information
33 Proportion of loan balancesto loan amounts too high
34 Amount owed on delinquent accounts
36 Length of time open accounts have been established
37 Number of consumer finance company accounts established/relative to length of credit history.
38 Serious delinquency and public records or collections filed
39 Serious delinquency
40 Delinquency public record or collections filed
47 Number of consumer finance inquiries
97 Lack of recent auto loan information
98 Length of time consumer company loans have been established
99 Lack of recent consumer finance company account information.

The ICFE wants consumers to understand if you have accessed more that 50 percent of your available credit limits on credit cards, your credit score will suffer. The greater the amount of the credit line that is used, the lower the credit score will go.

For more information about credit scores: www.myfico.com.

Sources: Craig Watts - Fair Isaac Corporation and Ryan Sjoblad at myFICO.com

               

About the ICFE:

The Institute of Consumer Financial Education (ICFE) was founded in 1982 by the late Loren Dunton (creator of the Certified Financial Planner (CFP) designation).  The ICFE is dedicated to helping consumers of all ages to improve their spending, increase savings and use credit more wisely. 
The ICFE is an award winning, nonprofit, consumer education organization that has helped millions of people through its education programs and Resources. It publishes the Do-It-Yourself Credit File correction Guide, which is updated annually. The ICFE has distributed over one million Credit/Debit Card Warning Labels and Credit/Debit Card Sleeves world wide.

The ICFE became an official partner with the Department of Defense/Financial Readiness Campaign in June of 2004.The ICFE was an active partner in the California Student Debt Resource Awareness Project (CASDRAP) which resulted in a new web site: (studentdebthelp.org).  CASDRAP disbanded in 2010, shortly after the web site project was completed.  In 2011 the ICFE assumed the single sponsorship of the (studentdebthelp.org) web site and is now responsible for its content and operation.

The ICFE is also an on-line help for consumers who spend too much.  ICFE's spending help was featured in PARADE Magazine in the Intelligence Report section. The money helps and tips are from the ICFE's Money Instruction Book, our course in personal finance.

Visit the ICFE's other web sites at: www.financial-education-icfe.org and studentdebthelp.org.  Both sites helps consumers and students with mending spending, learning about the proper use of credit, budget and expense guidelines, how to set up and implement a spending-plan and also how to access financial education courses and how to teach children about money. Other ICFE services include: Ask Mr. G,  a free eNews, and an online resource center for students, parents and educators, plus financial education learning tools and a book store.

About the ICFE:

The Institute of Consumer Financial Education (ICFE), founded in 1982 by the late Loren Dunton (creator of the 'certified financial planner' (CFP) designation) and it is dedicated to helping consumers of all ages to improve their spending, increase savings and use credit more wisely. The ICFE trains and certifies Personal Finance Instructors for its own curriculum. It also trains and certifies Credit Report Reviewers and Identity Theft Prevention Specialists.

The ICFE is an award winning, nonprofit, consumer education organization that has helped millions of people through its education programs and Resources. It publishes the Do-It-Yourself Credit File correction Guide, now in its 16th printing and has distributed over one million 'Credit/Debit Card Warning Labels' and 'Credit/Debit Card Sleeves' world wide.

The ICFE became an official partner with the Department of Defense/Financial Readiness Campaign in June of 2004.

The ICFE is also a partner in the national Jump$tart Coalition for Financial Literacy and the California Jump$tart chapter. The ICFE staff is also active with San Diego Saves, an offshoot of America Saves, and the California Student Debt Resource Awareness Project (CASDRAP) (studentdebthelp.org).

The ICFE's on-line help for consumers who spend too much was featured in PARADE Magazine in the Intelligence Report section. The money helps and tips are from 'The Money Instruction Book,' a course in personal finance, positioned to become among the premier programs in the new bankruptcy and debtor education initiatives.

The ICFE Web site at: www.financial-education-icfe.org helps consumers with mending spending, learning about the proper use of credit, budget and expense guidelines, how to set up and implement a spending-plan and also how to access financial education courses and videos and how to teach children about money. Other ICFE services include a free eNews, and an online resource center of financial education learning tools, including videos, books, software and personal finance courses.

 
Home ] ICFE News Releases ] ICFE in the News ] Children and Money ] Financial Education ] Resource Center ] Credit Card Tips ][ Credit File Correction ] Mending Spending ] Links and Resources ]  [ Online Store ]

 

Copyright ©  1997 - by Paul S. Richard
and the Institute of Consumer Financial Education, All Rights Reserved.
View our
Privacy Policy Our Terms and Conditions

Institute of Consumer Financial Education
PO Box 34070
San Diego, Ca 92163
Paul S. Richard, Executive Director
Phone 619-239-1401

FAX 619-923-3284

Questions for www.financial-education-icfe.org Click to go to Website Contact Us or 
Website Design Donated by Desgn School Programs