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FICO scores a game you can't win

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BruceP
New Member

FICO scores a game you can't win

After getting in considerable debt, I subscribed, got my scores and spent weeks reading the experts steps for getting out of debt.

Over the last 12 months, my wife and I have paid down over $65,000 worth of debt, finally getting to within range of our goal to be credit-card/loan debt free.

All along this road, I expected that my scores would reflect what we did.  Starting at 760, we thought this would be great.  

We followed the rules to the letter.  Don't close the card, pay down the highest interest first, don't request new credit.  You name a rule, we followed it.

Meanwhile, our income never wavered, no missed payments, zip.

 

So, what happened?  Well, the debt went away, along with our FICO scores.  With each card paid down to $0 or near $0 ($500-$1000), the companies tripled the interest rate on the card, or slashed the credit line.  Our FICO score is now almost 60 point below where we were at the start.

 

According to all the info, with what we did, companies should have been falling over each other to give me their best rates.  Instead, we been treated like the riskiest people on the planet.

 

As far as I can tell, FICO scores are designed to make you spend and keep you spending.  In every case, when we stopped, the card manufacturer did exactly the opposite of what the "rules" say is supposed to happen.

 

We are now in the odd position of almost being out of all CC debit, having the same income as when we had a ton of debt, and having vastly worse FICO scores.

 

This seems to be a game you can't win, and the rules apply solely at the wim of the company.

 

Are we going to change?  heck no.  They can scores us at whatever they want, me and my wife don't care anymore.  We're going to get out of debt to the best of our ability and probably have 1 and only 1 CC.  FICO can then do what they want, we will be where we want to be.

 

But I doubt my story is unique and its a shame for people to go thru the trials it takes to really get your debt down, only to find out, that the reward you expected, is opposite to what happens.

 

BP

Message 1 of 11
10 REPLIES 10
Anonymous
Not applicable

Re: FICO scores a game you can't win

Congrats on paying down the debt!    As you said, that's reward enough....

 

Reconsider closing credit accounts.  There are several threads about the pros to keeping accounts in good standing open.  Your credit needs might change in a few years, and how many posts have started with "The worst thing I ever did was close..."

Message 2 of 11
sleekblackroadster
Valued Member

Re: FICO scores a game you can't win

so you had large amounts of debt and high utilizations.. but you didn't have any baddies or a low fico score to begin with?

 

the credit card companies were making money off of you and then they started making less and less..

 

but good to hear your original plan of getting out of considerable debt was the main benefit and the objective that was achieved!

 

most of the people say above 700 scores really don't make much difference so going from 760 to 700 isn't terrible in that sense.. and you are still in a position to get good rates on loans, get the credit cards you may want in the future and such, right?

 

also remember the scores don't take into account income.. but those companies you apply for credit from will.

just opened 2 new accounts.. Macys Red and BOA 99/500.. util went from 89% to 64% overall but AAoA dropped from 3 to 2 years.
Jan 09 - TU 640 EX 615
Dec 08 - TU 643 EX 622
Message 3 of 11
BruceP
New Member

Re: FICO scores a game you can't win

We only intend to close a handful and leave the rest at $0.  Despite what they say about closing accounts, I have found that it makes very little if any real difference in your scores.

 

After a while at a low or zero balance, I find most companies slash the credit line to $1000 so the card becomes useless anyway.

 

But to some degree, I will play the game, I just won't expect much from it anymore.

Message 4 of 11
Anonymous
Not applicable

Re: FICO scores a game you can't win

Hi there!  I'm sorry that your scores took a hit, but it's got to feel good to not be indebted to these cc's anymore. Don't close them out, though! You may not care now, but when it comes time to buy or refi a home, purchase a car, etc. you'll need your scores. What happened to you really isn't any evil ploy by Fico, it's rather the unpleasantly of our current credit climate and economic downturn.  CC companies are so nervous right now when people carry high balances, that they are doing what is called "Chasing the Balance" and lowering your limits as you pay down your debt. This can have a negative impact on your credit score was it has a great impact on your utilization. Carrying a $100 balance on one card could now be the same as carrying a $10000 balance on higher limit cards, previously. So many people are being affected by this practice and scores are suffering because of it.

 

Just make sure the majority of your cards are reporting a zero balance on you credit reports and you should see an increase in your scores again. Even if the same card once had a $20,000 limit now only has a $1,000 limit, it affects your scores the same provided the % of available CL is kept low. Fico doesn't really care how much your CL's are, just the percentage of the available credit that is being used. So, $10 charged on a $100 CL is the same as $1000 charged to a $10,000 CL.

Message 5 of 11
BruceP
New Member

Re: FICO scores a game you can't win

In a way, I guess that's my complaint.  By ignoring the amount and only looking at utilization, the score becomes meaningless.

 

If I have a low income and a low utilization, but the actual amount owed is high, thats a problem waiting to happen.  Reverse that, high income, high utilization, but the amount is small since the consumer has never requested a higher credit line (for example), means that there is little or no risk to the financial institution.

 

I certainly agree that a great deal of what is happening is because of the current climate, but so much of our current troubles are mirrored in precisely these actions:  The consumer has difficulty paying etc, so the financial company triples his % rate.  Making the problem worse.

 

Now they are driving down scores with no firm financial reason to do so, hurting peoples ability to get credit and to spend, driving the economy further into the situation it is trying to get out of.

 

It seems that the financial institutions have virtually become expert at acting in a manner guaranteed to make the problem worse, rather than better.

 

Thats a sad commentary on the leadership of our financial institutions. 

Message 6 of 11
marty56
Super Contributor

Re: FICO scores a game you can't win


@BruceP wrote:

In a way, I guess that's my complaint.  By ignoring the amount and only looking at utilization, the score becomes meaningless.


The idea is that someone who is making say 20k a year has the same chance as someone who is making 200k.  It about how you manage your cedit.

 

Look at it this way, FICO score is the key to the lock on the credit box and how much credit you can take out is a function of how much money you make.

1/25/2021: FICO 850 EQ 848 TU 847 EX
Message 7 of 11
GFer
Valued Contributor

Re: FICO scores a game you can't win

And aside from future mortgages, car loans, and other credit (being easier to get--once the credit crunch has eased up), you'll save money on insurance and breath easier!

 

Your scores will go back up, provided you make whatever payments you have or incur on time. After awhile of doing this, the companies will probably raise your limits again, too. Like said before, they probably just got nervous at the previous balances. Happening to everyone, so don't take it personal.

 

Just consider yourself very blessed to have gotten out of all that debt, especially with things the way they are now and in the near future.  Smiley Wink



EQ 817, EX 815, TU 813 (Updated 1/5/18: TU 843

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Message 8 of 11
Anonymous
Not applicable

Re: FICO scores a game you can't win

Since we are consumers being graded on our credit worthiness, why is it the same institutions that ding us are being dinged also.  Shouldn't there be a grading system for the lending institutions that made errors in judgment lending to people the knew were not creditworthy?  Now there are CLD in the works which will ultimately affect our scores and lines of credit that will be difficult to get because of their credit decision making.

 

I think we should start up a company that tracks the ethical dealings of lending institutions especially during this turmoil of the economy today.  There is no Fair in many things, just pay your bills, check your reports often and pray....just pray.

Message 9 of 11
BruceP
New Member

Re: FICO scores a game you can't win

I appreciate all the support!  Not really taking it personal, just disappointed that there is not a little more sanity and oversight in the companies taking action.

 

Truth be told, I would just as soon have the limits lowered as high limits is what got me and my wife into this mess, spending way more than we should have.  We could afford it (which is why our scores were so good), but then in 6 months, out of the blue, my spine went, legs went, and a $100,000 job went to disability and SS.

 

Luckily we had help from family and enough time and resources to get ourselves pretty much out of the mess we were in, but never again.  Luckily my wife is solidly behind the plan, and while it will be several years before we are totally solid, thats the only direction we are going in.

 

Once burned, I'm stocking up on fire extinguishers.

 

thanks to all!!

 

Bruce

Message 10 of 11
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