Reason Codes: What They Mean for My Credit Score – Episode #109
What is a Reason Code on a Credit Report?
Because credit reports have a history of being cryptic, regulators asked the credit reporting agencies to provide a summary of sorts, reasons why your credit isn’t higher. When credit reporting agencies started to market their products to consumers, they started to provide 4 negative reason codes and 4 positive reason codes to consumers.
How Do These Impact My Credit Score?
The problem: these codes can often be confusing themselves. They often tell a consumer something vague, like you “opened too many credit lines recently” without telling you exactly how many points that cost you. Why don’t they tell you this? They are concerned that the credit scoring algorithm could be reverse engineered. This is a valid concern [sorry all] but don’t feel lost, you can usually see from the codes what steps might make sense.
| CODE | REASON | SOLUTION | CODE | REASON | SOLUTION |
| 01 | Amount owed on accounts too high | Reduce current account balances to below 30% of credit limits) | 22 | Serious delinquency, derogatory public record or collection filed | Settle this and request goodwill removal |
| 02 | Level of delinquency on accounts too high | Pay your bills on time | 23 | Too many bank or revolving accounts with balances (Equifax only) |
Reduce the balances and carry balances on only a few cards |
| 03 | Too few revolving accounts (Trans Union #33) |
Open more revolving tradelines,and keep them active | 24 | No recent revolving balances | Use at least some of your revolving cards. NO need to carry a balance, just use it and pay in full. |
| 04 | Too many revolving accounts (Trans Union n/a) | Close newest credit card accounts first | 26 | Number of revolving accounts (Trans Union NA) |
Use just some of your revolving cards. NO need to carry a balance, just use it and pay in full. |
| 05 | Too many accounts with balances | Limit activity to only a few accounts, and pay off other accounts | 27 | Too few accounts paid as agreed (Trans Union only) |
Pay off your cards. Bring them up to date. |
| 06 | Too many consumer finance accounts | Pay off consumer finance accounts on time, or preferably in advance | 28 | Number of established accounts (Equifax & Experian) |
Normally, I don’t suggest closing cards, but fyi, 800 score people have 10 accounts not 50 accounts |
| 07 | Account payment history too new to rate | Wait 6-12 months to reapply | 28 | No recent bankcard balances (Trans Union only) |
Use your cards. Pay in full. No need to carry a balance as balance is reported as “closing date” not “due date” |
| 08 | Too many recent account inquiries in last 12 months | Ask credit guarantors to consolidate or remove inquiries | 30 | Time since last account opening too short | Time heals. A longer account history is required |
| 09 | Too many accounts opened in last 12 months | Stop opening accounts. People who open too many accounts are riskier | 31 | Too few accounts with recent payment info. (Trans Union n/a) |
Use your cards, but pay them off in full |
| 10 | Proportion of balances to credit limit too high on revolving accounts | Reduce revolving credit balances to a lower proportion of credit limits. Aim for <30%. 10% if you are shooting for an 800 | 32 | Lack of recent installment loan information (Trans Union #4) | Request credit grantor to update information |
| 11 | Amount owed on revolving accounts too high | Keep $ amounts owed lower. Preferably less than $5,000. | 33 | Proportion of loan balances to loan amounts too high (Trans Union #3) |
Maintain balances below 30% of credit limits |
| 12 | Length of revolving credit history too short | Improve credit usage for 6 months and recheck | 34 | Amount owed on delinquent accounts (Trans Union #31) |
Reduce or eliminate all past due balances |
| 13 | Length of time (or unknown time) since delinquency | Time heals. You have to wait 6 months and recheck. Note: that delinquencies stay on for 7 years | 35 | Payment due on accounts (not used) |
Pay past due balance |
| 14 | Length of time revolving accounts have been established | Wait 6-12 months to reapply | 36 | Length of time open accounts have been established (not used) |
Time heals. |
| 15 | Lack of recent bank revolving credit information | Mixture of credit matters. Make sure you have bank credit cards | 37 | Number of consumer finance company accounts established relative to length of history. | Time heals. Don’t open more consumer finance loans. |
| 16 | Lack of recent revolving account information | Wait 6-12 months to apply or reapply | 38 | Serious delinquency and public records or collections filed | Settle delinquent debts, liens, or judgments |
| 17 | No recent non-mortgage balance information | Need credit and/or installment credit | 39 | Serious delinquency and public record or collection filed | Settle delinquent debt, lien, judgment, or collection |
| 18 | No. of accounts with delinquency (or Frequent delinquency - Trans Union) |
Multiple delinquencies need to be brought current and properly maintained | 40 | Derogatory public record or collections filed | Settle derogatory debt, lien, or judgment |
| 19 | Too few accounts paid as agreed (Trans Union #27) |
Pay your bills on time and in full | 47 | Number of consumer finance inquiries | Stop applying for consumer finance credit. Time heals. |
| 19 | Date of last inquiry too recent (Trans Union only) |
Wait a few months. This will disappear. Recent inquiry adversely influences scores. | 97 | Lack of recent auto loan information | Request creditor to update account information |
| 20 | Length of time since legal item filed (derogatory public record) or collection reported | Time heals. These will fall off in 7 years. No action needed. | 98 | Length of time consumer finance company loans have been established | Time heals. Pay as agreed or ahead of schedule to get these paid in full. |
| 21 | Amount past due on accounts | Pay past due balance | 99 | Lack of recent consumer finance company account information | Request consumer finance company to update account information |
I realize the chart above is a little daunting. So don’t worry about it. Just know it’s here for you if you want to check it. Most actions needed are really common sense. Pay your debts, be on time, keep balances low. Time can heal all wounds.
Similar Posts:
- Reason Codes: What They Mean for My Credit Score – Episode #109
- What is a Goodwill Letter? Can It Impact My Credit Score? – Episode #19
- Credit Score Estimator Can Estimate Your FICO Score – Episode #89
- Length of Credit History: 15% of your Credit Score – Episode #83
- Credit Bureau vs. Credit Reporting Agency – Episode #77
- My Credit Score – Episode #107
Hi, on my Transunion credit report I have old student loans with a balance of 0. These are rated – I0 – TOO NEW TO RATE
Should this be of any concern to me?
Old student loans with a balance of zero are a good thing. Credit scores like old accounts with balances of zero or paid in full. The best FICO score holders usually have a bunch of paid off loans.
I have 7 open credit cards, and a total available credit of $100,000. I paid down some of the credit cards recently, and now have a total of $33,000 in credit card balances. Three of the credit cards have balances of 70% to 90% of the total credit line. The other four have either no balance or a balance of less than 10%.
(Yes, I’ve been playing the 0% balance transfer game, which I’ve still been able to play despite the changes in the economy and credit card policies, although now I often have to pay a 3% balance transfer fee).
I have a perfect payment history going back over 20 years – I never miss a payment.
I also have a mortgage of $105,000 (on a $350,000 house) and a home equity line with a $40,000 limit on which I owe $24,000.
I’m going to apply for one or two more 0% credit cards soon. My question is whether it will look like I have too many credit cards and too much potential credit. I have three cards that are essentially unused with credit lines of $24,500, $20,000 and $5,000, respectively. Am I going to look better to the credit card companies if I keep these open, shut them down, or should I ask them to reduce the credit lines?
Don’t ask for reduced lines, and don’t close down credit cards. These actions will hurt your credit score. If your total open cards exceeds 10 cards, you might get dinged on your score, but it sounds like you have fewer than 10 cards. The people who get dinged tend to have 15-20 cards. But, make sure you have an end game to stop the 0% rollovers, which is sounds like you have. Great work!
Received a rejection letter today from Capital One, with a code that isn’t in the above list:
New account balances are too low (Equifax).
PS: The last time I opened a credit card was in October of 2008. My FICO score on Equifax was 774 as of last week.
Haven’t seen that one. Is there a code number? Can you scan it and email it me at info {at] videocreditscore.com? Note there are positive and negative reason codes so we should make sure these are negative codes.
My credit scores from Equifax, Experian etc. show a code of amount owed on accounts is too high. I don’t have any debt besides my mortgage which is low. No car payments, credit card debt etc. I pay off all of my balances every month and I have more cash in the bank that what I owe on my mortgage. What gives?
Credit scores can’t see how much you have in the bank. If you mortgage is high at all, you get this code. I get it for living/owning in California. No way to get rid of it until you pay down your mortgage significantly. It doesn’t usually weigh heavily on the score.
Hey Andy, to your last point, I also live in California and get the same response for my mortgage. My score is around the 800 mark, so I’m not terribly disappointed with that, but I can’t seem to get a credit card right now because if it. What percentage of my loan do I have to buy down in order to remove myself from this bucket? I have cash on hand that I could buy down the loan with, but I’m not sure whether or not that’s really worth it at this point just to get a credit card that better suits my needs. Thoughts?
This may not really be the reason you can’t get a credit card right now. The banks are just really tight with handing out new credit. I wouldn’t pay this down just to get a credit card. Perhaps consider using debit cards for 6 months and reapplying. Also, did you apply for a credit card from the same bank you have your savings/checking accounts? We have returned to the age where relationships matter and you may get an approval there.
Thanks for the prompt response! I’ve heard similar reasoning in regards to credit being tight, but I always figured I’d be a prime safe decision for a lender based on income, cash reserves and lack of debt outside of said mortgage. I have a credit card that is perfectly acceptable, I was just looking to add some arsenal that would better suit me in regards to rewards/returns. The upside of buying down my loan just isn’t there for me right now, so it’s probably a path I’m not going to go down at the moment, but out of curiosity, is there a general percentage of debt to loan amount that I would be looking to target? I’ve heard to keep it below 80% at very least, but I don’t know if that number holds water for any reason.
I haven’t heard of a debt to loan amount on the mortgage side for an ideal credit score. I do know that once you pay it off in full, your score will jump again. I’d just let time take care of this.
My transunion score dropped to 618, (reason 46 “Lack of satisfactory morgage history) I paid off a mortgage about 12 yrs ago, and am a disabled single guy with no need to own another house. My debt to credit ratio is a bit high (60%), probably too many accounts with balances, but have not ever paid late or missed payments and am presently paying amounts sufficient to pay off all the accounts within the next 2,5 yrs.. there is absolutly NO derrogatory history on my record. Am am not chrging ANYTHING more to the accountsm, as I am determined to free myself from these pirates. However, the low score increases the amount I pay for insurance, car loans, etc. and makes it more difficult to lease exceptable places to live. Given the brief history stated above, shouldn’t my score be close to 700?
A 60% CUR or credit utilization ratio is probably hurting you the most. Lots of people without mortgage history have 800+ credit scores. Check out this post on credit score factors. Amounts owed is a critical factor, so you know what’s next. You need to figure out how to lower your CUR. That will help you get your score back up. One strategy I do is to pay off credit cards 2x per month vs. once. Essentially matching the payments to when I get paid helps lower the debt load reported. Keep at it and your score will be back over 700 in no time.
Hey Andy, I just got a credit score release from a mortgage application and I have a slight question regarding the Transunion scores listed. They have an itemized list of 4 factors that hurt the scoring 014, 003, 030 and 011. The first three most likely relate to me refinancing an auto loan last week (about 2 weeks after my application for the mortgage). The final one 011 is listed as “Amount owed on revolving accounts is too high”. What exactly does this mean? I only have my auto loan, a debit card, and a single credit card. This card has a 7,500$ credit limit and has never had an end of month balance in the two years I’ve had it established. My credit rating is 748, so I’m not overly concerned with it in the aggregate (afterall, I am only 23 years old), however should I look into this error code? (If it matters, the highest balance I’ve had on that card in the last month was around 150$). Thanks!
“Amount owed on revolving accounts is too high” means that the balance at the statement date, not the due date is too high as a percentage. This means that you are usng to high a percent of the balance. Here’s one trick. Payoff your cards every paycheck. This will reduce the amount on the statement date, and that will make your ratio of balance owed/total go way down. See my post on increasing your score through reducing your amounts owed reported. Your goal should be to get amounted owed reported to look like 10% of your credit available.
I appreciate taking the time to answer my question on 8/2/10. Unfortunately, I was concerned about fraudulent activity. My credit balance on my ONLY card (that I know of at least) is 7,500. I’ve never used more than 110$ of it, ever. That’s less than 2% of available credit, which is why I was concerned about the “Amount owed on revolving accounts is too high” the only other debt I have is an auto-loan that was refinanced the week before I received that credit report, thus no payment has been made. I’m really confused about how 2% credit utilization is “too high” or if I should be concerned about identity fraud. I’ve had to have my debit card cancelled this year already because someone stole the number and began fraudulent charges in another state.
Hmmm. Seems like a tough one without seeing your credit report. If the balances reported look low, you are probably fine. Sounds like the “revolving accounts too high” reason code is not really right for you. Especially if you have a 748 score. If you are worried about fraud you can set a 90 day fraud flag at fraudalerts.equifax.com.
I was just denied a “revolving charge request” (a 6-month same as cash request) due to “amount of unused bankcard credit limits”. What exactly does that mean and how can I rectify this? I currently have no balances on any credit cards (just paid off an $1800 MasterCard balance) and only have my mortgage payment which is automatically withdrawn from my checking account so is never late. I have taken advantage? of “6 months same as cash” transactions several times in the past through Best Buy and Furniture Row and paid the balances off before the end of the 6-month time period. Have those transactions hurt my credit? Thank you in advance.
This is a new one sneaking up on people. This has changed just in the last 2 years. It appears to be a good idea to keep using your cards, even if just one transaction per month. This keeps the banks from closing down unused cards or given you the “amount of unused credit limits” is too high. You may be getting a amount of unused credit limit is too low, but that comes from maxing out your cards. Have you ordered your Score Report yet?
Hi,
I applied for the Capitol One Visa Signature No Hassle Rewards Card. I would like this card because it has no foreign transaction fees and I am about to go travel overseas.
I have a sterling credit score. I have 3 reports from the last year that shows my credit score is over 700. I always pay my bills on time and in full. I have no loans and no debt and no bad marks on my credit report.
To my surprise, I was denied the card. There is an address that you can send a letter to dispute the rejection which I would like to do. Before I do that I need to better understand a few of the reasons I was rejected.
-Based on the credit report from Equifax, credit limits are too low.
-Based on the credit report from Experian, revolving credit balances are too low
-Based on a credit report from Trans Union, applicant is not a homeowner
-Based on a credit report from Equifax, there has been insufficient pay down of mortgage accounts.
To answer to the first rejection – I called my current CC – Citi Mastercard. My credit limit is 10,000. This is higher than all my friends that have the card. According to Capitol One a 10,000 limit is high enough. I do not understand.
To answer to the second rejection about credit balances being too low. I average 1-3k on my CC every month. I pay it in full every month. How can this hurt me? Is there something I can say to them in the letter to them?
To answer to the third rejection bullet point, it is true I am not a homeowner. The Capitol One representative said I do not need to be a homeowner for this card. My friends that have the card and applied on the same day – in the same hour for this card – do not own homes. Somehow they were granted the card. I do not understand.
To answer to the forth rejection point, I do not have any mortgages – neither do my friends with the card.
I would appreciate any advice you may have about steps I should take to remedy this situation.
Many Thanks,
Nicole
Code 11: “AMOUNT OWED ON REVOLVING ACCOUNTS IS TOO HIGH”
Does this mean I still owe money even if I have a zero balance?, I am very confused.
I applied for a Capital One credit card and was denied saying, “proportion of revolving account balance(s) to income is too high.” What is a revolving account and what does this statement mean?
It means your balances on the statement date are too high. There are two important dated to remember. One is the due date and the other is the statement date. Even if you pay off in full each month. If you use your card for $2000 of purchases an only have $3000 in available credit line you look risky. Even I you pay in full. One thought. Pay your credit card off on every payday. That should reduce the likelihood of the balanced too high flag
I’m still a little bit confused. I’m very new to this and I’ve never had a credit card before so I don’t get how I would have a statement date? I’m a current college student and part time waitress if that helps any bit. Thank you!
Jennifer. Credit card companies think you are risky I you use too much available credit. If you have a credit limit of $1000 and you for example charge $900 of purchases even if you pay off in full your score will suffer as people who max out tend to stop paying off bills and leave the credit company with a loss. The trick is to use only 20 percent of your credit limit and use cash for most things. At the same time look to build your history by getting a new card and/or asking your credit card company to raise your limits. This is easier done once you build 6 months of good history.
I got denial letter while applying for AMEX Blue Cash Card showing following reasons: Equifax: 1) Length of time accounts have been established 2) Proportion of loan balances to loan amounts is too high 3) Too many accounts with balances 4) Too many inquiries last 12 months. I have been in US last 1.5 years. I have 2 credit cards from bank and 2 from shopping (like Macy) with total less than $3500 credit limit. I also have auto loan of $10k. I am planning to get free credit report after completing 2 years in USA. I am using 60-70% of credit line and regular in paying off all bills till date. But based on above, what do you suggest for improving credit score and lowering such denial?
Hi, Andy – I have a question about a TransUnion score update. This year, I’ve taken the challenge of paying down debts like crazy and have virtually achieved a goal of getting all balances on bankcards to <35%. TransUnion updated my score – which is GREAT, but still cite the following reasons – REASON 48 (too few active mortgage accounts), REASON 68 (Total account balances excluding mortgages is too high), REASON 06 (Bankcard account balances are too high in proportion to credit limits), and REASON 41 (Too fee recently opened bank installment loans). For reasons 68 and 06 are being corrected, but what gives with reasons 48 and 06? I have an installment loan for my car and it's been paid perfectly, but I'm being viewed negatively because I don't have a mortgage??? HELP please. Thanks!
Hello I’m trying to rebuild my credit and I have my online school that I paid off and on both experian and equifax it states paid and then on transunion it says “automated accounts” I didn’t see this on the above graph so I’d thought I’ll ask you. Also I have a medical bill which says “joint” and on the bottom of the that it also say “automated accounts” can I dispute this to where I can have it removed from my credit?
MJ. These reason codes can drive anyone bananas. The reality is people with a mortgage tend to be less risky. That said. When I was a renter, my score was 831 and now with a mortgage it’s around 800. Go figure. People who get codes that make little sense tend to have pretty good scores. You are doing the right things. Get your credit utilization down to 10% and you should have a good score.
Rahul. Did you check out this post? Expats and Credit Scores.
You need time and a few steps mentioned above and keep your credit usage to less than 10% of limits.
I just applied for MBNA the reason code is “lack of established revolving credit refrences.” what does that mean? and whats the solution to it?
This means you don’t have any credit cards, or not enough. MBNA is afraid to be your first, or one of your first. Often you can get an installment loan with a big bank, and then apply 6-12 months later for a credit card from that same bank. They are more likely to accept your app based on the same bank record of payment.
You can try to dispute these. Sounds like you will have a good likelihood of success given 2 of your reports have the right information. Check my credit resources section for info on how to do a credit dispute letter
lack of recently reported established accounts
I received some conflicting reason codes. Based on the information I have read above…how can I have 1 reason code that says: “Amount of Unused Bankcard credit limits”….and then another reason code in the same letter that says: “# of REV ACCTS WITH BALANCE>= 50% OF HIGH CREDIT” ?
Basically what they are saying is “We denied you credit because you aren’t using your cards enough. We also denied your credit because you are using your cards too much.” WTF?
Yeah…so…….yeah.
Alan
i got a letter from equifax statting lack of recently reported established accounts ipay all of my bills on time never been late on anythig i was turnd down for a home projects visa card my credit score 814.
How many accounts do you have? That may explain the “lack of recently reported accounts”.
My Trans Union Credit score just dropped 13 points from Sept to Oct due to “Too few premium bank accounts” and “too few satisfactory accounts”. The only change made since Sept was to increase the available balance on one FIA charge card by decreasing another FIA charge card which we barely use. Could this have triggered the “too few satisfactory accounts” reason? That was the only additional explanation on Trans Union.
Sadly, this “too few accounts” is often an enigma. I would just watch to see if you gain 10 points back in the next few months.
All 3 scores are 800 or above but I have reasons like; Too many Consumer Finance Company Accounts and Too Many Accounts Opened Recently. We have one credit card, a Lowe’s card and a car loan. i just applied for a home loan and got the credit scores. I know the scores are high but I’m worried what these resons mean? Should I have a full report to see open accounts?
I wouldn’t worry about it. Sleep well, knowing your 800+ scores are great.