I Need Some Clarity

DueDilligence · ‎01-13-2015

My credit score has been dropping as if I'm getting penatilized for bad behavior when if anything I'm doing things exactly how I should be doing them.

1) My billing statement was for $2.00 and I paid account off for full for that billing cyle. When this account was reported to the credit bureaus for $0.00 balance my credit score dropped 12 points.

2) My student loans where in deferrement for 12 months reporting okay for those months and with their respective balances. My Student loans just came out of deferrement for the first time and I made my payment on time for that month and when reported it literally dropped my score 24 points.

My question for anyone who has had a similar experience or is somewhat competent in credit scoring is how the heck did this happen? I've been building my credit score with pride and making careful decisions with high concerns of always making my payments on time. Credit available to debt raitios and debt to my income is always running through mind.

Big question everyone, is there anyway I can list my monthly gross income and would that improve or factor in to my credit score. This is bull, I'm just trying to take it one step at a time and the very least obtain a 660 credit score already.

Chris679 · ‎01-14-2015

1) You never want all of your revolving accounts (usually credit cards) to report a zero balance. This will certainly drop your credit score. If you let the statement cut with a $2.00 balance and they reported it later after you paid then I don't know what to tell you there. They are usually going to report the statement balance so maybe it was a one time fluke.

2) No experience with student loans so I cannot help you here.

For answers to your other questions you may want to provide more info about your current credit situation to paint a clearer picture about where you are at. Any negative accounts, how many revolving or installment accounts, average age of accounts, etc. Also, where are you getting these credit scores from?

To answer your last question, your income does not affect your credit score but it will certainly factor into approvals for new accounts and loans.

Anonymous · ‎01-14-2015

@DueDilligence wrote:
My credit score has been dropping as if I'm getting penatilized for bad behavior when if anything I'm doing things exactly how I should be doing them.

1) My billing statement was for $2.00 and I paid account off for full for that billing cyle. When this account was reported to the credit bureaus for $0.00 balance my credit score dropped 12 points.

2) My student loans where in deferrement for 12 months reporting okay for those months and with their respective balances. My Student loans just came out of deferrement for the first time and I made my payment on time for that month and when reported it literally dropped my score 24 points.

My question for anyone who has had a similar experience or is somewhat competent in credit scoring is how the heck did this happen? I've been building my credit score with pride and making careful decisions with high concerns of always making my payments on time. Credit available to debt raitios and debt to my income is always running through mind.

Big question everyone, is there anyway I can list my monthly gross income and would that improve or factor in to my credit score. This is bull, I'm just trying to take it one step at a time and the very least obtain a 660 credit score already.

I don't have any experience with student loans either but I would say the fact that they came out of deferment was the culprit. You can't list your income on a credit report and it has nothing to do with your fico score. Just because a person makes a lot of money doesn't mean they'll use that money to pay their bills. That has to be demonstrated in other ways, on time payments, amount of payment to bring down utilization etc. It wouldn't be fair if you make 100k a year and I make 30k but I always pay on time and you don't but you have a better score because you got points for having a bigger income. That's the theory on that.

TiggerDat · ‎01-14-2015

I was just thinking about student loans today and how to avoid paying interest on them. The solution I came up with was to simply be a student longer. This will put them back in deferment. You can still pay them while in deferment! You can take classes online for a Master's Degree at a inexpensive college. While it might not have the best name or recognition, it will improve your employability later! That usually means a higher income too! You only need to be enrolled half time, so there are creative ways of doing this. A school that has classes which start every 8 weeks is a good idea. This means one class every 8 weeks. It also means a slight delay between classes while the reporting is being transitioned, so you could basically take an extra year for the classes! It might be a little difficult to do the work and work, but it could help you in many ways! If the problem with the score was deferment, then that should be corrected if you were to do this. You would also save money on the interest which would help to pay for the school.

I will be successfully in deferment for the next two years and will end up with a second Masters Degree and a Masters Certificate. It will open a few doors for me doing this and I will be able to pay down on my bill!

It is by will alone I set my mind in motion.....
Always follow these rules: Only take a HP for a new account. Always use the best rewards card for that reward category. Don't close a card unless you know you really should. Never use more than 35% of a credit limit. Recon as much and as best you can. Use the introductory period to the best advantage. Get the signup bonus. Whenever possible PIF or balance transfer so you pay less in interest. Never give an excellent rating when it is actually the norm. Always look for a discount as more is always better.
Always accept candy from strangers because they have the best candy or from people you know have good candy.

takeshi74 · ‎01-14-2015

@DueDilligence wrote:
My credit score has been dropping as if I'm getting penatilized for bad behavior when if anything I'm doing things exactly how I should be doing them.

Which score? Where are you getting it from? You need to consider that there are many scoring models out there and most creditors use FICO's so if you're obsessing over a FAKO it may be irrelevant. That said, if your FICO's are dropping then you're not doing things exactly how you should be doing them and may need a better understanding. Start with the usual factors and don't overlook the Understanding FICO Scoring subforum as a resource as well.

http://www.myfico.com/crediteducation/whatsinyourscore.aspx

@DueDilligence wrote:
My billing statement was for $2.00 and I paid account off for full for that billing cyle. When this account was reported to the credit bureaus for $0.00 balance my credit score dropped 12 points.

Is this your only credit card? If so, you don't want it to report a 0 balance. There is a hit for having 0 balances report on all your credit cards. Additionally, at least 2-3 cards are generally recommended for scoring purposes.

When does it report? If you pay prior to report date then it will report 0 if you pay the current balance. However, if you pay after the report date then the account will report the current balance. Most cards reports on statement date and if your card is like that then you can just wait for the statement to be generated and then pay the statement balance in full to keep the account current and to avoid interest.

@DueDilligence wrote:
My student loans where in deferrement for 12 months reporting okay for those months and with their respective balances. My Student loans just came out of deferrement for the first time and I made my payment on time for that month and when reported it literally dropped my score 24 points.

Nothing you can do about that. There is a positive benefit from having installments in your credit mix. However, your problem is that you installments are new so they have a high balance to loan amount ratio. This effect will taper off as you pay down the balances.

@DueDilligence wrote:
Big question everyone, is there anyway I can list my monthly gross income and would that improve or factor in to my credit score.

Take a look at the link above and note the slice for income. As stated above, income doesn't really indicate anything about your credit. One can have high income and poor credit. One can have low income and excellent credit. They're two different things even though both are used by creditors in their decisions.

@DueDilligence wrote:
This is bull, I'm just trying to take it one step at a time and the very least obtain a 660 credit score already.

How do your reports look? If you're under 660 do you have derogs? If so, hit Rebuilding and see what you can do to address them as they tend to have a major impact.

Unless you're intended to immediately apply, stop fretting over the specific numbers. With responsible usage and time you'll see a general increase. You have to be prepared to be in the credit game for the long haul.