FICO buckets are used to group consumers with similar profiles and credit histories. Basically it is done so that the FICO algorithm compares apples with apples, not apples with oranges.  While the FICO scoring formula takes into account many variables, the bucketing concept makes sure that consumers with similar variables, e.g, length of credit history, revolving utilization, number of late payments, number of collections, etc., are compared against each other.  That way you are not compared with someone who is in a completely different credit situation.

Apparently there are several “buckets”, but seems only two negative buckets are known about with a degree of certainty.  The first one is for serious derogatory records including 90-day or more late payments, a charge-off, a collection, and / or a 60-day late that is less than 2 years old.  The second is for public records such as bankruptcies, wage garnishments, foreclosures, and tax liens. If you have both, a public record and a derogatory record from the first bucket, you are likely to go to the second.

As with most of the FICO algorithm, there are many things about FICO bucketing that no one knows, except for the people who invented and implemented this concept.  The best thing one can do is resolve and dispute late payments and other issues that may be reported in error.  Searching for credit repair tips here can help you tremendously.