11 points is a small change. If you're going to obsess over the numbers then set a much higher threshold. I'd suggest at least 20 points. Better yet, focus on the data in your reports.
@dyneemo wrote:
What is the point in paying off credit if it lowers your score?
Your assumption is oversimplified for one thing. You're also possibly assuming that paying it off was the only change that impacted your score. Don't just assume that all debts are assessed the same. I'm not saying that your Dell account was an installment -- I have no idea if it was or not -- but, for example, there is generally a bit of a score dip when paying off one's only active installment. Definitely read up and educate yourself on how credit is assessed and scored. The loss of the benefit to Credit Mix is a fairly common topic around here. Don't overlook existing threads as a resource in educating yourself.
For understanding FICO scoring, start here:
http://www.myfico.com/crediteducation/whatsinyourscore.aspx
This does not cover everything. It is just a starting point. Also don't overlook the Understanding FICO Scoring subforum and its stickies.
The "point" isn't just about score. Score is certainly a consideration but your overall financial health matters more than just score. There can certainly be sitautions where score is negatively impacted but the overall benefit to one's financial situation is greater. Don't assume that increasing your score is ever the only point.
EDIT: From quick Googling it looks like DFS consumer accounts are probably revolving accounts.
@dyneemo wrote:
I have other credit card accounts that I have paid down to $0 as well (they are all still opened) but you'd think that if you pay off an account that is closed, you'd get an increased score.
I don't think that. Don't conflate "you" and "I". People that aren't familiar with credit seem to tend to assume that. Again, credit isn't quite as simple and straightforward as you're assuming.
In addition to what I said above about installments and Credit Mix it is widely known and frequently discussed around here that there is a scoring penalty for having all of your revolving accounts (credit cards are revolving accounts) report 0 balances. These are just a couple of examples but there could be even more at play with your current situation. We don't have enough information to say.
If you really want to understand the reason(s) for any scoring change you can't just look at scores. You have to carefully review reports from before and after the scoring change to determine the cause(s). If you can provide enough info we can tell you why your score changed but, again, fretting over 11 points is a bit much. Your scores will fluctuate a bit just from normal usage and you'll drive yourself crazy sweating over constant small changes like that.
@dyneemo wrote:
Also, I've noticed that when I pay a larger amount on a credit card and the balance lowers, my score does too. Sometimes if I charge on a card, my score goes up?? I don't understand this.
You're assuming causality without carefully reviewing your reports. It's not simply about balance or when you pay. It's about revolving utilization (balance[s]/limit[s]) and when those changes report. Your accounts do not immediately report. They typically report once a month on their usual report dates. If you're aware of those report dates and how long it usually takes the CRA's to update after your creditors report then you might be able to better understand how revolving utilization changes are impacting your scores.
On top of all that, scores aren't impacted only by revolving utilization. Revolving utilization does have a significant impact but it is just one thing that falls under Amounts Owed in the link I provided above. There are other factors that all matter as well. A significant enough reduction in revolving utilization will improve your scores as long as there aren't other factors with a bigger negative scoring impact. The opposite is true as well. If revolving utilization significiantly increases you'll see a drop in score as long as there aren't other factors with a bigger positive scoring impact. Again, though, you need to be sure that those balances have reported before just assuming that score changes are due to balance changes.
On top of all that you have at least a 90 day late on your reports if not other derogs. If you have derogs on your reports those will have an impact on how your report data is evaluated. Definitely hit the Rebuilding subforum and carefully research to see if you can do anything to address the derogs. You want your reports to be totally clean with 100% positive Payment History as it is the biggest factor for FICO.
You need to do whatever it takes to avoid derogs going forward. A 90 late is very late and indicates that your monitoring of your accounts is not sufficient. With proper monitoring you should have caught this before it was even a 30 day late. Make sure you're actively monitoring all open accounts. If you are using autopay that's great but that's not a substitute for monitoring your accounts.
Don't just look at scores to understand how changes impact your scores. Look at your report data.
@dyneemo wrote:
The account was closed (by me) at that time; I still had a balance due.
Be very careful closing revolving accounts with balances. They can report as maxed.
@Berk wrote:
Ah, yes, the question everyone wants an answer to. The experts will tell you that there is no one simple answer for this due to the complexities of scoring algorithms and that there is generally more than just that singe tranaction that goes into determining our score even though all we can see is the single transaction.
We're not saying it's impossible to determine the causes. We're jsut saying that it takes much more than just looking at scores to determine these things.
Any score is generated based on the data in a report. That's why careful review of reports is required. If you have one score and the report it was generated from and you have another score and the report it was generated from then the differences in the report data will tell you why the scores were different. Of course, that assumes that the scoring model is the same. You cannot compare score generated by different scoring models as they evaluate report data differently and can have different scoring ranges.
@Berk wrote:
However, one point on which there seems to be consensus is that once the loan is paid off that limit is no longer reflected on your report, thus potentially affecting your overal utilization.
Utilization is generally used to mean revolving utilization which only considers revolving accounts. There's a similar thing for installments, balance to loan ratio but that doesn't have the same impact as revolving utilization. As I mentioned above, it doesn't look like a DFS account is an installment from what I can tell but I didn't spend much time looking into it. The OP can research this as the OP will want the understanding.
@AverageJoesCredit wrote:
I can understand how you feel when you see a big drop like that. Today i got an alert from myfico that my TU dropped 11 points, was at 700,yeah!, now at 689, nay!. I was like WHAT???. I went straight to my TU account searching for what had happened.
I know you didn't but one cannot rely solely on myFICO alerts either. That's because myFICO is a trigger based service.
http://myfico.custhelp.com/app/answers/detail/a_id/463/~/understanding-what-triggers-fico%C2%AE-3-bu...
Not all changes with a scoring impact are triggers. So it's not uncommon for the trigger activty to not be the cause (or one of the causes) or a major cause of a scoring change. myFICO and its triggers are also common topics.
