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FICO Dropped 50 Points

Contributor

FICO Dropped 50 Points

I made a purchase of $75,000 on my Southwest Visa....CL is $79,500....and all three scores dropped 50 points. I paid it off immediately but the balance reported before I did. Anyhow, just posting to reflect on how utilization can affect scores dramatically. I’m sure my scores will go back to where they should be next month.


Chase Southwest - $79,500 I CSP - $50,000 I Barclays Aviator Silver - $25,800 I
Wells Fargo Sig - $25,000 I Amex BCP- $34,000 I BankAmericard - $16,000 l AMEX Platinum NPSL l Barclays Apple - $10,000 l PayPal MC - $10,000 l Sportsmans Guide Visa - $12,000 l CITI AA - $9,400 l CITI Simplicity - $10,100 l CITI Double - $9,000
Message 1 of 10
9 REPLIES
Regular Contributor

Re: FICO Dropped 50 Points

This is a great post for the "practical value of a huge CL" thread. There was talk about buying cars etc. but no one said they actually bought something >$50K on a card.

 

What did you buy for $75K? Was it a personal purchase like a car or a audio system? An all-in vacation? A business expense? 

 

Here's the thread I referenced:

http://ficoforums.myfico.com/t5/General-Credit-Topics/practical-value-of-a-huge-credit-limit/td-p/47...

Fico 8 Scores
10/2017: EQ - 823; TU - 835; EX - 824; Seven CCs ($125,500 CL, 0%-1% UTIL); AoOA = 15.5 years; AAoA = 60 mos.; AoYA = 18 mos.; one mortgage; one car loan; derogs from 2009 and 2010 now gone after 7 years. It's taken a few years but credit scores are now good after starting in the high 500s back in 2011
05/2016: EQ - 712; TU - 706; EX - 710
11/2015: EQ - 694; TU - 651; EX - 653
5/2015: EQ - 640; 11/2014: EQ - 653; 05/2014 EQ - 653; 11/2013: EQ - 645; 05/2013: EQ - 656;11/2012: EQ - 646;
Message 2 of 10
Senior Contributor

Re: FICO Dropped 50 Points

This is also a great post on how dollar amounts are irrelevant to FICO scoring.  The OP lost 50 points due to taking a card to 90+% utilization.  That's all FICO cares about.  Not the fact that he took on $75k in debt.

 

On an otherwise equal profile, this would be the same exact thing as someone taking a $500 limit CC from a $0 reported balance to $470 reported or so.  Same 50 point score drop, except one person took on $470 in debt and the other $75k.  And, since income isn't factored into FICO scoring, these two otherwise equal individuals could in theory possess similar income levels, thus having relatively the same ability to pay back their debt.

 

I just find these things fascinating.

Message 3 of 10
Valued Contributor

Re: FICO Dropped 50 Points

Given that it's a Chase card, if you paid your balance to zero, your points should be back within days.

Message 4 of 10
Valued Contributor

Re: FICO Dropped 50 Points


DoctorLoomis wrote:

I made a purchase of $75,000 on my Southwest Visa....CL is $79,500....and all three scores dropped 50 points. I paid it off immediately but the balance reported before I did. Anyhow, just posting to reflect on how utilization can affect scores dramatically. I’m sure my scores will go back to where they should be next month.


Another fine example of Fico scoring foolishness. Regardless of amount (UT%) score should not be negatively impacted if balance is PIF by due date.

 

I'd be curious how the balance impacted the OP's AG UT% as aggregate utilization is a stronger scoring factor than individual  card utilization. I'd guess AG UT% went above 9% - did it do above 29%?

Fico 8: .......EQ 850 TU 850 EX 850 (3/2017)
Fico 9: .......EQ 850 TU 850 EX 850 (3/2017)
Fico 4 .....:. EQ 804 TU 823 EX 830 (3/2017) EX Fico 98: 839 (3/2017)
VS 3.0:...... EQ 832 TU 832 EX 832 (3/2017)
Fico 8 BC:. EQ 887 TU 899 EX 900 (3/2017)
CBIS: ........EQ LN Auto 940 EQ LN Home 870 TU Auto 902 TU Home 950 (4/2017)
Message 5 of 10
Contributor

Re: FICO Dropped 50 Points

My total available credit is $400,000.....and only the $75,000 charge showed.....ie $325,000 available.


Chase Southwest - $79,500 I CSP - $50,000 I Barclays Aviator Silver - $25,800 I
Wells Fargo Sig - $25,000 I Amex BCP- $34,000 I BankAmericard - $16,000 l AMEX Platinum NPSL l Barclays Apple - $10,000 l PayPal MC - $10,000 l Sportsmans Guide Visa - $12,000 l CITI AA - $9,400 l CITI Simplicity - $10,100 l CITI Double - $9,000
Message 6 of 10
Senior Contributor

Re: FICO Dropped 50 Points


DoctorLoomis wrote:

My total available credit is $400,000.....and only the $75,000 charge showed.....ie $325,000 available.


I suppose a 50 point drop here from this event depending on profile could happen.  

 

Your aggregate utilization sits at 19%, so if that's up from 1%-9% you crossed the "best" threshold which would result in a solid score drop.  I would think this would be 20-40 points.  Then, in terms of individual trade lines you took one from 0% utilization to maxed out, which results in a further score ding, perhaps 10-15 points.  Those are just rough guesses, but the range then would be 30-55 points lost from that event and 50 points certainly falls in there.

Message 7 of 10
Valued Contributor

Re: FICO Dropped 50 Points

My "FICO estimator" tool I've been working on seems to show that people with just one maxed out card consistently lose 30-40 points, and that aggregate utilization between 9% and 29% seems to ding another 10 points or so.  So 50 points is consistent.

 

One thing I've wondered is if there's a percentage basis for high utilization but I haven't been able to prove it.  Once I get multiple Chase accounts (that I can PIF and re-report to CRAs) I can test this.  My theory was that your maximum penalty for maxed out utilization is based on how many open credit card accounts you have.  So someone with just 10 credit cards with 1 maxed out has 10% of their CCs maxed out, while someone with 30 credit cards with 1 maxed out has 3.3% of their CCs maxed out and may see a smaller ding.

 

I haven't been able to to prove this yet without slaughtering my FICOs for a month.

 

Would be great to see someone with two Chase cards getting data points on 1 card maxed out and 2 cards maxed out to see if there's a difference in FICO ding.  Can do that it one cycle by maxing out two cards, paying one to zero a week later, and then paying the second to zero a week later.

FICO8FICO8Visit my posts:
03/1712/17My 11 Rules to Credit RebuildingFree FICO Scores!
550EX
570TU
559EQ
710EX
701TU
734EQ
FICO alert: why did my credit score drop???
Message 8 of 10
Senior Contributor

Re: FICO Dropped 50 Points

One of the major constraints to testing maxed out accounts is always credit limits IMO.  Unless you are talking toy or small limit cards, it's very difficult for most of us to test maxed out cards, especially multiples.  I think most of us with good-excellent credit scores that are into this type of testing likely have high limit cards, where those with smaller limit cards that have poor-fair scores probably wouldn't be into testing such things.

Message 9 of 10
Valued Contributor

Re: FICO Dropped 50 Points


BrutalBodyShots wrote:

One of the major constraints to testing maxed out accounts is always credit limits IMO.  Unless you are talking toy or small limit cards, it's very difficult for most of us to test maxed out cards, especially multiples.  I think most of us with good-excellent credit scores that are into this type of testing likely have high limit cards, where those with smaller limit cards that have poor-fair scores probably wouldn't be into testing such things.


I concur that impact of maxing out a card is profile dependent. If the account that is maxed out is young, it probably is more impactful than if the account is well aged with a solid payment history. Additionally, if the profile is seasoned (lengthy AoOA) a max out may have reduced weight (signal strength).

 

The OP doesnot mention how old the account is. With regard to the OP's profile being fully seasoned - say AoOA over 20 years, that's TBD as well.

 

I any event, I'd estimate 20 point drop do to AG UT going above 9% and 30 points for the card going above 89%. Selfishly speaking, a data point with a partial paydown taking card UT to under 49% while keeping AU UT over 9% followed by a reduction of AG UT to under 9% would have been insightful. 

Fico 8: .......EQ 850 TU 850 EX 850 (3/2017)
Fico 9: .......EQ 850 TU 850 EX 850 (3/2017)
Fico 4 .....:. EQ 804 TU 823 EX 830 (3/2017) EX Fico 98: 839 (3/2017)
VS 3.0:...... EQ 832 TU 832 EX 832 (3/2017)
Fico 8 BC:. EQ 887 TU 899 EX 900 (3/2017)
CBIS: ........EQ LN Auto 940 EQ LN Home 870 TU Auto 902 TU Home 950 (4/2017)
Message 10 of 10