Dumbfounded on score

[Anonymous]

I pulled my score last fall and I was stunned.
It was rated at a 593...

What is so bizzare is this.
I have had 1-2 late payments in the last 3 years.
Other than the debt/credit ratio..that was it.

I did have some other small things but they seemed to be older.
I keep telling myself that my debt/credit ratio must be what is killing me.

My wife is European so I took all the car payments, credit cards, etc, under my name.
I can see where it would look like I had high debt.
My wife was great on paying her share though. She is taking on her own loans as she can and is doing awesome.

I payed off one car right before I pulled that score and payed off the 2nd this past week.
I also payed off another loan and plan to clear at least half of my credit card bills when I get my bonus next week.

But....sitting back..I have to ask.
Could a debt ratio kill my FICO so badly?
And if not..exactly how badly does a couple of late payments hurt you?

Lastly....how long after I pay a bill should it affect my credit score?

[fused]

Hi brokelife and Welcome!

I highly recommend you read the credit scoring 101 thread in my sig line.

Just some things to know about FICO scoring and how they are negatively affecting your scores.

- Any late payment can hurt your scores; worse if they are 60 days past due or longer and if they are less than two years old. A 30-day late payment that's older than 1 year will have less of an affect on scores. Also, as years pass, late payments have less and less of a negative affect to scores.

- High credit card (and other revolving accounts) debt can really tank FICO scores, in fact, a maxed-out card can have as bad of an affect on scores as a collection or public record. Paying down revolving debt is the fastest way to improve your FICO scores...pay them down quickly if you can. For max points, half less than half your cards reporting a balance of 1-9% util (credit limit/ balance owed) and all the others reporting a $0 balance on your reports.

- Installment loan utilization calculations pale in comparison to revolving util calculations. Worry more about credit balances than installment loan balances...with installments (and credit cards too) just NEVER pay late. I would like to give you more info on this aspect of FICO scoring but I don't want to overwhelm or confuse you. Please read the links below and come back with your questions.

[RobertEG]

Hey broke!  welcome to the forum!    Your post shows a diligent credit history, and that is great! 

I will try to give you a point reference.  Lates are tough, but nothing you can do about them other than ro just let them age. Each late is going to still hit you for around 8-10 pts for up to two years, and all you can do about that is get older!  The killer is if any of those lates hit 90+, for they will hit you, even after two years, still  for up to 20poihts each.  But %util is a bigger factor, percentage wise in total FICO score, and something you can control.  If you paid off  your car loans, that wont help much, because it will hurt your credit mix, while improving your %install util at about the same amount.  So your whole plan appears to be reduce %util of REVOLVING util.  That is well over 20% of your total score.  For every 10% reduction in revolving credit util, you will gain about 10-15 FICO points.  Pay down the credit cards!

Lastly, after you take any credit action, you must expect that it will not be both reported by the creditor unti their next reporting date, and then entered by the CRA (credit reproting agency, e.g., EQ), until they receive and process the date.  Give it 2-3 months after you take an action.

Message Edited by RobertEG on 02-22-2008 07:19 PM

[Anonymous]

While I understand the basics of credit scoring, the username I selected seems appra-pos.

I have a score of 683, have no late payments listed and have 1 collections listed for a medical payment that was ultimately made by my insurance company from 2003.

What brings me down are the number of accounts I have opened throughout the years - 39.

Its a funny world we live in.....companies offer you credit in hopes you get sucked in and cannot pay it off before the 30-60-90 day 0% interest teaser expires but when you do go for these types of offers, and pay it off, you get dinged on your FICO score because you take advantage of credit offers like these and ultimately have too many accounts opened.

If credit companies can take advantage of people by offering them 0% financing for a limited time and then charging them an exorbitant rate on the whole balance once the teaser period expires, why can't consumers take advantage of these companies by using their offer to best suit the consumers needs?

The problem is, if I cancel these open & fully paid accounts, it hurts my FICO score, not helps it.

Its a vicious circle if you ask me.

For responsible consumers, credit scores are bunk and should be looked at with a grain of salt. I pay me debts and that's all that creditors should be concerned about, period.

[haulingthescoreup]

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@Anonymous wrote:

While I understand the basics of credit scoring, the username I selected seems appra-pos.

I have a score of 683, have no late payments listed and have 1 collections listed for a medical payment that was ultimately made by my insurance company from 2003.

What brings me down are the number of accounts I have opened throughout the years - 39.

Its a funny world we live in.....companies offer you credit in hopes you get sucked in and cannot pay it off before the 30-60-90 day 0% interest teaser expires but when you do go for these types of offers, and pay it off, you get dinged on your FICO score because you take advantage of credit offers like these and ultimately have too many accounts opened.

If credit companies can take advantage of people by offering them 0% financing for a limited time and then charging them an exorbitant rate on the whole balance once the teaser period expires, why can't consumers take advantage of these companies by using their offer to best suit the consumers needs?

The problem is, if I cancel these open & fully paid accounts, it hurts my FICO score, not helps it.

Its a vicious circle if you ask me.

For responsible consumers, credit scores are bunk and should be looked at with a grain of salt. I pay me debts and that's all that creditors should be concerned about, period.

---

Hi, welcome to the forums!

Which credit score is this --EQ (Equifax), TU (TransUnion), or EX (Experian)? Where did you pull it? --here at the myFICO site, the EQ site, the EX or TU sites, a credit-monitoring service like TrueCredit or CreditSecure?

Can you copy/paste whatever negative comments (and positive) came with your score?

Closing a credit card doesn't hurt your score, unless it hurts your overall util (balances owed / total credit limit. Doesn't particularly help it, either. Please read the Closing Credit Cards link in fused's siggy up above.

If your medical collection was ultimately paid by insurance after all, you need to get that thing off of there. My husband has the same situation on his report: a bill that was improperly submitted to insurance in 2002 and denied, and instead of cleaning it up, they just turned it over to collections. It looks like insurance is going to pay it now, and so I'm figuring how to get the collection removed from his report. It's only on two of his reports, and the third one without the collection is more than 70 points higher, so you can see that it makes a big difference.

[Anonymous]

Thanks guys,

Just for the record, it was a couple of 30 day lates...and they were a couple of years ago.

My goal is to now get the credit cards down. I suspect that they will be cleared by the summer.

I have to admit that it was both stunning and depressing to have the score that I got. It was an Equifax score BTW.

I always thought I was good at paying my bills. Everybody always got their money.

I do not have any collections or repos, etc...

Like I said, I had a couple  of 30 day lates.

But...I will keep plugging away. Hey...even if FICO does not like me, it is VERY nice not having to cover another bill every month.

[haulingthescoreup]

Hi, brokelife, I think you're going to be VERY surprised and happy with the turn-around that you get on your scores once the revolving util is paid down. As fused said, don't worry so much about installment util, other than making sure that you're always paying on time. It's the revolving that drives FICO scores.

FWIW, My EQ went from 610 in April 07 to its current 728, mostly from reducing util to under 1% of 1%, which is probably overkill, lol. Certainly, there were other things going on: I have lates (*sigh*), and I increased my history age when I added on to my husband's 18-year-old Discover card. It was actually briefly lower --it went up to 642, and then down to 590 when a new 30-day late payment posted in May. But the 610 was with a much higher util.

The very cool thing about util is that it is almost completely under the control of the consumer, assuming that the lenders and the credit bureaus will do their jobs properly and update payments when they're supposed to! It is absolutely astonishing how quickly your scores can respond when you pay down your cards. I've found that I get my best results when only one or two cards report balances, and the others show 0%. I use them, but I pay them to where I want them about 5 days before the next statement is due to post. In that way, I can control the dollar amount that is reported to the CRA's, and it's that figured that is used in calculating my FICO scores.