Credit Card Balance and Scoring - Confused

[Anonymous]

Hi all-

I am currently in the process of purchasing a home and started using myFICO in September. In September, my score was 801. I have never paid anything late; it appears that the only negative aspect of my report is a limited credit history. 

With regard to credit cards, I only have one store card with a relatively low credit limit ($5,000). I never thought of this to be a problem because I do not use credit cards often. However, in October, my balance (which I pay off in full monthly) was $74 more than the prior month per the account statement (but, my balance was still less than $400). This dropped my score 10 points! I was very upset by this, so I paid the credit card off completely and did not put anything on it in October thinking my score would come back up. However, with this month's report, my score dropped 11 points due to the credit card balance dropping to zero. Now, I am just confused.

Any suggestions on what to do here? Do I keep the balance at zero now? Or, will having a small balance on the card bring my score back up?

I have already been approved for my mortgage (commitment letter), but we don't close until February 1. I do not want this tiny credit card (again, my balance never exceeds $400) to hurt my score.

Thank you!

[ddemari]

it sounds like you were full throttle optimizing your credit reports for the best possible fico score in preps for mortgage? And you definitely did it!!!! It sounds like the -10 to -20 point flucuation has to due with maybe the result of an inquiry, new account showing up, slightly higher balance reported all of that together. but you will see those points back in no time as your reports equals out. you cant worry about those types of point loss, they happen and you are still way above 760 excellent credit. nice job on getting there! 

[ddemari]

i didnt take into consideration that you havent closed yet although since you have the letter, you are good as they arent going to pull your credit again? 

[AzaleaB]

Leave small balance on your cc to gain some points back. A 0 balance with just 1 cc will cause a drop in your score.

[Anonymous]

Maybe someone can help me understand the scoring a bit.  I am extremely frustrated with EQ, somewhere along the way, they deleted all my old accounts so they are always my lowest reporting agency,  my frustration is this, we bought a house, I charged on my Home Depot card.  I paid 150.00 on the card and both my TU and EX scores went up, EQ stayed the same, I charged 10.00 on my chevron card with a cl of 1200 on it, just to show activity.  TU and EX stayed the same and EQ dropped me 3 points because I owed 10.00.  I paid the 10.00 and charged 11.00 more for the next month so as not to go to a zero balance and again EQ lowered my score because My balance increased by 1.00, TU and EX, again stayed the same.  I don't understand why they always work in the reverse of the other bureaus and penalize me every time I charge anything on any of my cards, my total utilization of all cards together are about 2%, I'm way below the 10% recommended usage so why on earth do they take points every time? I barely use any of my available credit.  I just do not understand my EQ score is always 40-50 points below the other two, despite have all the same current accounts on them. 

[Anonymous]

Thank you for your responses! I have the commitment letter, but they are going to pull our credit again closer to closing. I will try keeping a low balance on the card to bring it back up. Do you think I will be ok as long as I stay above 760?

[Anonymous]

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@Anonymous wrote:

Thank you for your responses! I have the commitment letter, but they are going to pull our credit again closer to closing. I will try keeping a low balance on the card to bring it back up. Do you think I will be ok as long as I stay above 760?

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Yes, but I'll tell you what you can do to but your mind at rest.

(1)  If you don't have a small balance on the card now, go put something on it today.  $10 is fine.

(2)  Find out when your next statement is going to post.  It is very likely that the credit card issuer will report your positive balance to the three bureaus a few days after that statement date.  What you want to do is find out when that positive number is going to update at the three bureaus.

(3)  If it is going to report to the three bureaus by Dec 20 (-ish) then you are probably fine.  If it looks like your positive balance may not report until Jan 1 or later, then you should call the CC issuer, explain why this is so important, and ask if they would be willing to send an update to the three bureaus before then (e.g. by Dec 15).

(4)  If you do not have a utility that lets you pull your credit reports once a week for free, sign up for Credit Karma.  Ignore their scores but pull the credit reports once a week, and watch the balance being reported on your card.  When Karma reports that Equifax and TransUnion both have that small positive balance on their report, you are good to go.