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 balances to 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 balances to 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