Credit score drop, then increase.

[Anonymous]

Awhile back I posted about an unexplained 60+ point drop in my 800+TransUnion credit score. I have no mortgage, no unpaid bills, and had not used my credit card for over a year. ( As I explained, I don't need credit, so I don't bother with it, and certainly won't pay an annual fee for it.) The drop took place in 2015, and lasted for over a year.

Recently I decided to fly out west to visit an old friend, and about the only way to buy a plane ticket is with a credit card. Lo and behold, the use of my credit card bumped my credit score right back up to exactly where it had been before.

I speculated on and seem to have been correct that my credit score was not actually a relfection of my creditworthiness, but of my credit utilization. In other words, my FICO score isn't really a credit score, but a credit utilization score. It would be interesting to hear if others have had similar experiences.

[Anonymous]

Yep.  It's very well establsihed that when a person's credit card(s) all report $0, that results in a scoring penalty -- which is then reversed as soon as one card reports a balance (which could be quite small).

[Anonymous]

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@Anonymous wrote:

In other words, my FICO score isn't really a credit score, but a credit utilization score. It would be interesting to hear if others have had similar experiences.

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The above portion of your post is inaccurate.  A FICO score is comprised of 5 different factors, the second most important in terms of scoring impact is utilization.  This makes up 30% of your FICO score.  So, at best, your argument here could be that 30% of your FICO score is a credit utilization score.  It's then important to understand though that what happened with your profile wasn't the worst thing that could have happened with respect to that 30% of your score.  As CGID already correctly pointed out, one takes on a slight scoring penalty when all credit cards report a zero balance.  This scoring penalty however is minor relative to the scoring penalty associated with maxing out all of your credit cards, for example.  It's also minor compared to bringing all of your credit card balances to, say, 70% utilization.  My point here is that in allowing all of your cards to report $0 balances, your FICO score isn't even close to losing out on all of the points that make up the utilization slice of the pie.  

[Anonymous]

As CGID pointed out, I'm sure I'm already taking a hit since my credit cards do not (ever) carry balances. Even so, my score is over 800, and I'm fine with that.

I'm not making an argument concerning what portion of the score is a credit utilization score, but rather I'm simply discussing what actually happened to my credit score, and the factors involved. My credit score was over 800, until I didn't use my card for over a year. At that point, my credit score dropped by over 60 points (80 points would be a 10% drop), and stayed there until after I used my card, at which point my credit score returned to exactly the same score as before. (The credit score factors before and after the drop were exactly the same, making the return to the exact score reasonable). This is strongly indicative of a flaw in the FICO system, since my creditworthiness didn't change when I didn't use my card, or for that matter when I did. Based on the facts, the drop and return of my score appears to be based entirely on my use of my credit card, and as such not based on actual credit worthiness.

My point here is that having a zero balance on my card didn't ding my score: failing to use my card created the hit.

A drop of over 60 points (from over 800, excellent credit) to potentially under 740 (good credit) is a significant drop. one that could easily affect my ability to get a loan, not to mention insurance rates which are often affected by credit scores. For what little its worth, I take issue with the FICO scoring system penalizing me for being financially responsible and not using (or needing to use) a credit card.

Thank you for letting me clarify.

[Anonymous]

Can you remind us about the total number of credit cards you have?  I am pretty sure you have exactly one card, but my memory could be faulty.

Also, when you say that your TU credit score took a big hit....

     * Is that a FICO 8 score that you are getting with that credit card?

     * And is that the only bureau you were seeing?  In other words, you are not claiming that your EQ and EX score did not take a dive -- they might have also taken a dive but you just didn't have scores from them to assess that... correct?

[909]

Zero speculation is needed. This is well documented here and many other places.

Anyone  at this forum should recognize that a credit score

 as currently designed. as a suitability-to-consume-in-the-long-run score. 

[Anonymous]

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@Anonymous wrote:

As CGID pointed out, I'm sure I'm already taking a hit since my credit cards do not (ever) carry balances. Even so, my score is over 800, and I'm fine with that.

I'm not making an argument concerning what portion of the score is a credit utilization score, but rather I'm simply discussing what actually happened to my credit score, and the factors involved. My credit score was over 800, until I didn't use my card for over a year. At that point, my credit score dropped by over 60 points (80 points would be a 10% drop), and stayed there until after I used my card, at which point my credit score returned to exactly the same score as before. (The credit score factors before and after the drop were exactly the same, making the return to the exact score reasonable). This is strongly indicative of a flaw in the FICO system, since my creditworthiness didn't change when I didn't use my card, or for that matter when I did. Based on the facts, the drop and return of my score appears to be based entirely on my use of my credit card, and as such not based on actual credit worthiness.

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While the others repeated some well-known Newtonian physicsof FICO-land(tm), am I the only one to find the bolded part the least bit interesting?  I'm not ready to to say it's the quantum physics of the paradigm shifting understanding of reality we're going through IRL, in this metaphor, but this is where I wouldn't mind the board having one of those moving emoticons/emojis of someone tossing back some popcorn.  Nature thrives on the new, or uncommon repetitions, although it cuts the great mass of them down.  

If FICO were as easily understood as they pretend, and most of us figuratively buy, there wouldnt be as much of a reason for folks to buy it literally.  

Either way, I appreciate your data points and post, OP.  The title didnt originally seem as interesting to me as it turned out to be, the way I wish more movies in the past few years would have been.  

PS: OP, have you said if you paid off the recent, one-time charge yet?  I'd be interested to see how long it takes for the score change this time.   Also, did you mention exactly what type of score this is/the source?  Has anyone mentioned date of last activity in the thread yet?  For what it's worth, I'm not as boned up on the Newtonian model of FL as some, but now and then I suppose it can be helpful if you dont mind the rest.  

[Anonymous]

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@Anonymous wrote:

Can you remind us about the total number of credit cards you have?  I am pretty sure you have exactly one card, but my memory could be faulty.

Also, when you say that your TU credit score took a big hit....

     * Is that a FICO 8 score that you are getting with that credit card?

     * And is that the only bureau you were seeing?  In other words, you are not claiming that your EQ and EX score did not take a dive -- they might have also taken a dive but you just didn't have scores from them to assess that... correct?

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Hey OP!  When you get a chance, see if you can answer those questions above.

Also curious if you can remind us what happened after you used the card for the trip out west to see your friend:

     * When did that happen?  (Month/year)  It sounds like it happened in the last five months, but I can't be sure.

     * Did your credit card statement print with a positive balance?

     * Did you pay the balance in full?

     * Has the CC balance been $0 since paying it off?

     * Have you tracked your score since then?  If so, what has it been for the last few months?  (Including the month it reported a positive balance and the months after.)

I ,may have a theory that would account for all of the facts, but it depends on what the answers are to all my questions.

[J-F168]

 

My story:

Discharged in December chapter 7. I have a bunch of CC's from December.

 CAPITAL BANK                    $  0 / 300

COMENITY BANK/EDDIEB $52/  350 

COMENITY BANK/PIER 1   $  0/  500

COMENITYCAPITAL/FRON $ 0/3,500

COMENITY CAPITAL/HSN  $36/  800

COMENITYCAPITAL/OVER $ 0/2,900

CREDIT ONE BANK             $ 0/   450

FIRST PREMIER                  $ 0/   300

LENDUP CARD SERVICES $ 0/   300

MERRICK BANK CORP       $ 0/   700

SYNCB/AMAZON PLCC      $ 0/   400

SYNCB/CARE CREDIT        $ 0/1,500

SYNCBPAYPALEXTRASMC $0/   300

 Closed Accounts (on customer request) I am looking to close at least five more credit cards.

COMENITYBANK/BRYLANE $0/ 250

COMENITYBANK/VICTORI   $0/ 250

COMENITYCAPITAL/FRON  $0/2000

I opened all my comennity in June/July.

Few days ago my credit score from my fico.com were:  Equifax  646  TransUnion  629   Experian  645

On Experian.com all 3 score are identical with myfico.com, less reporting my Equifax dropping score. On Equifax.com my Equifax is unchanged 616. 

yesterday I received an alert with on Equifax  here on fico ( no alerts on equifax.com or eperian.com) showing two new credit cards with zero balance and a drop of 101 points only on Equifax/ myfico.com, on Equifax.com or Experian.com no alerts of opening two new acc's or score dropping dramatically. 

those new credit cards have a limit of 

COMENITY BANK/PTTRYBRN   balance $0 but doesn't show my limit which is 2,500

COMENITYBANK/SGUIDEVS     balance $0 but doesn't show my limit which is 2,500 

Edit as today 07/29/2017 myfico scores are back to normal        Equifax  646  TransUnion  629   Experian  645. 

[newhis]

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@Anonymous wrote:

Awhile back I posted about an unexplained 60+ point drop in my 800+TransUnion credit score. I have no mortgage, no unpaid bills, and had not used my credit card for over a year. ( As I explained, I don't need credit, so I don't bother with it, and certainly won't pay an annual fee for it.) The drop took place in 2015, and lasted for over a year.

Recently I decided to fly out west to visit an old friend, and about the only way to buy a plane ticket is with a credit card. Lo and behold, the use of my credit card bumped my credit score right back up to exactly where it had been before.

I speculated on and seem to have been correct that my credit score was not actually a relfection of my creditworthiness, but of my credit utilization. In other words, my FICO score isn't really a credit score, but a credit utilization score. It would be interesting to hear if others have had similar experiences.

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From where do you get your TransUnion credit score?

I read that you don't have a mortgage and you don't need credit, so you don't use your credit cards. Do you have any loan?

I have read that after 6 months (more?) without activity FICO will not be able to report a score. So I wonder how you can have a FICO score without credit activity.

Are your credit cards safe without activity? Any closed because of that?