FICO SCORE DROPPED 16 POINTS due to $4 charge

[Anonymous]

I got a credit alert yesterday, from Score Watch...

 "There are a few changes to your credit report today:

• An account shows a balance increase.

Also, your FICO® score has decreasedelling me that my credit score." 

I logged in to myfico to see what was going on and got this message.  

"You received this alert because this balance which was previously $0 increased to $4.  Your FICO® score decreased to 695 on November 8, 2009."

On Oct. 27th, my FICO score was 711.  The $4 charge to this credit card is the annual fee, billed monthly. 

How is it possible for $4 charge to cause a 16 point drop?  What can I do about it?

[marty56]

Quite possible.  If you where showing 0% util or had other cards reporting a balance and added 1 more it could do that.  FICO always rounds up so $1 is the same as a full 1% or your CL.  I assume that nothing else changed on your CR.  For me, TU likes 0% util while EQ doesn't.

[Anonymous]

Hi copaco! Welcome to the myFICO forums!

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copaco wrote:

I got a credit alert yesterday, from Score Watch...

 "There are a few changes to your credit report today:

• An account shows a balance increase.

Also, your FICO® score has decreasedelling me that my credit score." 

I logged in to myfico to see what was going on and got this message.  

"You received this alert because this balance which was previously $0 increased to $4.  Your FICO® score decreased to 695 on November 8, 2009."

On Oct. 27th, my FICO score was 711.  The $4 charge to this credit card is the annual fee, billed monthly. 

How is it possible for $4 charge to cause a 16 point drop?  What can I do about it?

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There's several possibilities:

1. This card that reported the $4 balance, was it previously idle for the last 3 months or more?
2. Did you have balances on other cards? If this additional balance caused half or more of your cards to report a balance, that might account for it.
3. Did you pull your full reports from the CRAs? Something else may have caused your score drop.

[Anonymous]

Thank You!

It may have been idle.  It's usually in a credit balance.  They bill the annual fee in monthly installments and since they charge me to pay the bill online, I send a check usually paying 3 or 4 months at a time.  I also have $1200 balance on my other card, Best Buy.  I haven't had any other score watch alerts and there have been no other changes to my credit, other than paying on time and paying it down.  I didn't pull a full report though, I guess that's next...16 points seems excessive for a $4 balance increase. 

Thanks Again!