Credit Score Drastically Bouncing

[Anonymous]

Hi,

I don't understand what is happening with my credit score, I check it very often.  in February my Equifax shot up to 759 from 710 in January, for no reason, TU and EX were 709 and 714 respectively.  Now, I just checked my report and EQ dropped down to 685, TU to 700 and EX to 688.  The only thing I have done is put a $1000 purchase on a card, effectively maxing it out.  I don't see anything in my report to indicate a negative that would warrant such huge drops.  I do, however, have high utilization.

Can anyone offer some insight?  I have been fighting to improve my scores, and I have, but these drops are really disheartening especially since I am starting to look to buy a house and get a mortgage.

Thank you!

[HeavenOhio]

Very high utilization and/or a maxed out card will do it. The good news is that paying your balances will cause your score to rebound.

I'd be particularly concerned about your maxed out card, not because of the score, but because you might make your card issuer nervous. When making a big purchase on a low-limit card, I think the best thing is to pay it off as soon as it posts. Even better would be to avoid having it post to your report so other lenders don't have a chance to take notice.

[SouthJamaica]

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@Anonymous wrote:

Hi,

I don't understand what is happening with my credit score, I check it very often.  in February my Equifax shot up to 759 from 710 in January, for no reason, TU and EX were 709 and 714 respectively.  Now, I just checked my report and EQ dropped down to 685, TU to 700 and EX to 688.  The only thing I have done is put a $1000 purchase on a card, effectively maxing it out.  I don't see anything in my report to indicate a negative that would warrant such huge drops.  I do, however, have high utilization.

Can anyone offer some insight?  I have been fighting to improve my scores, and I have, but these drops are really disheartening especially since I am starting to look to buy a house and get a mortgage.

Thank you!

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Utilization is the 2nd biggest factor in the FICO scores, representing 30% of the equation.

If you're looking to optimize your scores for the mortgage application, you should be letting only one card report a balance each month, and the balance should be 29% or less of the limit on that card.

[Anonymous]

Thank you for the replies.  So if I just pay off the charge on the card I just maxed out, in theory, my score should come right back?

[HeavenOhio]

Yeah, utilization is under your control, and it'll bounce right back as soon as your card reports to the bureaus again.

If you're prepping for a mortgage, you might want to fully optimize the utilization portion of your score. You do this by having all cards reporting zero except for one. The card reporting greater than zero should be a major bank card, and it should show a balance somewhere between $5 and >8.9%. You don't want to leave a balance of less than $5 because some card issuers will forgive small balances and report zero rather than bothering to bill you. And you don't want to rely on Chase to be the card that reports a balance because they'll report zero mid-cycle if you pay off the card.

[SouthJamaica]

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@Anonymous wrote:

Thank you for the replies.  So if I just pay off the charge on the card I just maxed out, in theory, my score should come right back?

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Not in theory... in reality.