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FICO dropped 100 pts in 3 months

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taxi818
Super Contributor

Re: FICO dropped 100 pts in 3 months

Rule number 1.  The bigger you are the harder you fall. It's not from mortgage. As you had several installment loans. It's the collection for sure. Even a small collection can cause 60-100 point drop. Hope you get it deleted.  Gl. 

Message 11 of 20
jamie123
Valued Contributor

Re: FICO dropped 100 pts in 3 months


@-NewGuy- wrote:

@jamie123 wrote:

You are running the risk of really weakening your credit profile. It happens to a lot of people during their lifetime. (I can speak from experience!) As you get more settled and have a higher income you lose the NEED for credit and stop using it.

 

My suggestions for you in order of importance:

 

1. You MUST have the medical collection removed from your reports! This is a HUGE hit to your scores right now because it is so recent but will be a drag on your scores for 7 years if it is not removed. It is not difficult to have it removed if you attack the problem now. Do it. Pay for delete. -- This is definitely the biggest factor, and should be the first thing addressed.

 

2.You should get one or two more credit cards every year for the next few years until you have 5 to 8 credit cards. You have a very thin credit report now with only two open credit cards. Sure, you have a pretty thick file now but as everything ages your file will become thinner and thinner. Credit cards are the only form of credit that you can keep open for life and you need to do that to maintain a thick credit profile. Credit card credit limits have ABSOLUTELY nothing to do with your credit scores! A $500 and a $30,000 credit card credit line are seen EXACTLY the same in FICO scoring. More cards equals better scoring . -- Not sure where the 5-8 cards comes from. Credit limits don't directly affect your credit scores, however higher credit limits do minimize your UTIL once you are using your credit, which is a good thing. Lastly, more cards don't specifically equal better scoring. If one person has five credit cards and another person has ten, with EVERYTHING else including AAoA, UTIL, credit history, etc being the same, I don't see why their scores wouldn't be the same.

 

3. This is optional and if you plan on getting an auto loan in the next year or two you really don't need it. Open a shared secured loan at SDFCU or Alliant Credit Union. FICO has a "mix of credit" scoring portion and having an open installment loan will boost your scores a bit. Your mortgage also figured into this calculation and you see how you lost points once it closed. -- Having a mix does indeed affect your score.

 

Closing credit cards is a bad idea unless they have an annual fee. Credit cards are the building blocks to a great credit score and will help you absorb the hits your scores take from adding new credit from time to time. (Auto loans, mortgages, etc.) They are a necessary evil. You should have from 5 to 8 open credit cards that you can keep open for life.


Having said the above in red, just worry about the collection for right now, and do everything possible to address it and get it removed. Priority number one.


@Anonymous

 

One of the commonalities of people that acheive a perfect 850 score is that they have 5 to 8 credit cards with an average age of 10+ years with the newest card being at least 2 years old.

 

Lastly, more cards don't specifically equal better scoring. If one person has five credit cards and another person has ten, with EVERYTHING else including AAoA, UTIL, credit history, etc being the same, I don't see why their scores wouldn't be the same.

 

You are correct, with EVERYTHING else including AAoA, UTIL, credit history, etc being the same, their scores would be the same UNTIL you add a new account or two. The person with AT LEAST 5 to 8 aged credit cards would hardly see a score drop and their scores will recover faster than a person that only has 2 or 3 cards. (OP only has 2 credit cards.)

 

You used an example of a person with 5 or 10 credit cards and I said 5 to 8 cards. I am trying to make a point that 5 to 8 credit cards are MUCH better to have on your reports than 2 or 3 credit cards. A person with 5 to 8 credit cards will look much better on manual review than a person with 2 or 3 credit cards. A person with 8 cards that are 10 years old will have 80 years of credit history, a person with 3 cards that are 10 years old will only have 30 years of credit history.


Starting Score: EQ 653 6/21/12
Current Score: EQ 817 3/10/20 - EX 820 3/13/20 - TU 825 3/03/20
Message 12 of 20
Revelate
Moderator Emeritus

Re: FICO dropped 100 pts in 3 months


@jamie123 wrote:

@-NewGuy- wrote:

@jamie123 wrote:

You are running the risk of really weakening your credit profile. It happens to a lot of people during their lifetime. (I can speak from experience!) As you get more settled and have a higher income you lose the NEED for credit and stop using it.

 

My suggestions for you in order of importance:

 

1. You MUST have the medical collection removed from your reports! This is a HUGE hit to your scores right now because it is so recent but will be a drag on your scores for 7 years if it is not removed. It is not difficult to have it removed if you attack the problem now. Do it. Pay for delete. -- This is definitely the biggest factor, and should be the first thing addressed.

 

2.You should get one or two more credit cards every year for the next few years until you have 5 to 8 credit cards. You have a very thin credit report now with only two open credit cards. Sure, you have a pretty thick file now but as everything ages your file will become thinner and thinner. Credit cards are the only form of credit that you can keep open for life and you need to do that to maintain a thick credit profile. Credit card credit limits have ABSOLUTELY nothing to do with your credit scores! A $500 and a $30,000 credit card credit line are seen EXACTLY the same in FICO scoring. More cards equals better scoring . -- Not sure where the 5-8 cards comes from. Credit limits don't directly affect your credit scores, however higher credit limits do minimize your UTIL once you are using your credit, which is a good thing. Lastly, more cards don't specifically equal better scoring. If one person has five credit cards and another person has ten, with EVERYTHING else including AAoA, UTIL, credit history, etc being the same, I don't see why their scores wouldn't be the same.

 

3. This is optional and if you plan on getting an auto loan in the next year or two you really don't need it. Open a shared secured loan at SDFCU or Alliant Credit Union. FICO has a "mix of credit" scoring portion and having an open installment loan will boost your scores a bit. Your mortgage also figured into this calculation and you see how you lost points once it closed. -- Having a mix does indeed affect your score.

 

Closing credit cards is a bad idea unless they have an annual fee. Credit cards are the building blocks to a great credit score and will help you absorb the hits your scores take from adding new credit from time to time. (Auto loans, mortgages, etc.) They are a necessary evil. You should have from 5 to 8 open credit cards that you can keep open for life.


Having said the above in red, just worry about the collection for right now, and do everything possible to address it and get it removed. Priority number one.


@Anonymous

 

One of the commonalities of people that acheive a perfect 850 score is that they have 5 to 8 credit cards with an average age of 10+ years with the newest card being at least 2 years old.

 

Lastly, more cards don't specifically equal better scoring. If one person has five credit cards and another person has ten, with EVERYTHING else including AAoA, UTIL, credit history, etc being the same, I don't see why their scores wouldn't be the same.

 

You are correct, with EVERYTHING else including AAoA, UTIL, credit history, etc being the same, their scores would be the same UNTIL you add a new account or two. The person with AT LEAST 5 to 8 aged credit cards would hardly see a score drop and their scores will recover faster than a person that only has 2 or 3 cards. (OP only has 2 credit cards.)

 

You used an example of a person with 5 or 10 credit cards and I said 5 to 8 cards. I am trying to make a point that 5 to 8 credit cards are MUCH better to have on your reports than 2 or 3 credit cards. A person with 5 to 8 credit cards will look much better on manual review than a person with 2 or 3 credit cards. A person with 8 cards that are 10 years old will have 80 years of credit history, a person with 3 cards that are 10 years old will only have 30 years of credit history.


Only if they had no other accounts; 10 years history on 3 credit cards, a 5 yearish auto loan somewhere in there, and a mortgage, likely looks the same from an underwriting perspective as someone at 10 years history with 8 cards, said auto loan, and said mortgage.

 

Either one is going to get approved for whatever (assuming no derogatories) so it's pretty irrelevant when we're talking those tiers in my estimation.  

 

You're right though the difference comes in when after they're approved for something else: I do agree that people should consider building a thicker file than just 2-3 cards; I'm unlikely to ever have an idle credit report when looked at over the long term, and since I'm unlikely to have a score buffer any time soon, might as well at least try to minimize damage with an AAOA buffer.  My theory anyway, though if I had an 800+ I probably would think it irrelevant since I consider 40+ points to be solid point buffer for any minor impact new accounts would have on my scoring.

 

 




        
Message 13 of 20
CluelessJohn
Contributor

Re: FICO dropped 100 pts in 3 months

Folks, appreciate all of the input and insight.  Very helpful.

 

I understand that getting a PFD for the medical blip is Job 1 and have researched what that entails on this site.  Still need to research my own records on the evolution of the specific debt amount shown on my CRs.  I'll do that this weekend and may ask for comment on the approach I plan to take.  Not sure if I post approach on this thread or make a new one in Restoring Credit.

 

When/If the PFD gets done, am I correct in assuming my FICO will instantly rebound and be based on a strong history and strong current position? - that is, the derogatory never happened.   I don't particularly care about a specific number;  I'm looking for very good/excellent.  I do plan on buying or leasing a new car in about 18 months.

 

Thanks

Chase Freedom Visa ($15K) Chase Freedom Flex ($15K) Chase Amazon Prime ($9K) USAA Limitless ($20K) AMEX BCE ($30K) CapOne QuickSilver ($15K) Citi DC ($20.5K) Citi Custom Cash ($5K) Discover It ($7.5K) BOA Cash Rewards ($5K) BOA MLB ($13K) USBank Cash+($10K) WF Active Cash ($8K)
FICO 8 ~800
Message 14 of 20
taxi818
Super Contributor

Re: FICO dropped 100 pts in 3 months

Yes. If you can get it deleted. That is correct. I pId a collection. And still not deleted. Only option is to write over and over and ask them to delete.
Message 15 of 20
CluelessJohn
Contributor

Re: FICO dropped 100 pts in 3 months - Succesful PFD

I want to put some closure to my initial post.   I was able to secure a PFD and verified that by obtaining my current EQ CR.

 

I want to say thanks to those that responded to my posts and provided feedback.   These forums are a great source of information and saved me from griping about a derogatory for the next 7 years.  I’ll know my FICO and FAKO based on TU in a few weeks.

 

My approach was not text book. I called the CA first and got nowhere through 2 levels.  I immediately called the OC and reached a deal – full payment for delete.  They pushed that upon the CA.  I sent the CA a cashier check with a cover letter that said cashing the check constituted acceptance of the agreement reached by the CA, OC and myself.

 

I consider myself to be fortunate to get the PFD.

Chase Freedom Visa ($15K) Chase Freedom Flex ($15K) Chase Amazon Prime ($9K) USAA Limitless ($20K) AMEX BCE ($30K) CapOne QuickSilver ($15K) Citi DC ($20.5K) Citi Custom Cash ($5K) Discover It ($7.5K) BOA Cash Rewards ($5K) BOA MLB ($13K) USBank Cash+($10K) WF Active Cash ($8K)
FICO 8 ~800
Message 16 of 20
Ragelog
Established Contributor

Re: FICO dropped 100 pts in 3 months - Succesful PFD

Let us know when the deletion happens and how much of your score rebounds. Congrats on the PFD

EQ04 675, EQ08 676, EX08 719, TU08 703 $12704.75/$123050 Revolving Credit (All 0% or 1.99%) - In Garden Since 5/25/2016

Last negative item should fall off in July 2017.
Message 17 of 20
jamie123
Valued Contributor

Re: FICO dropped 100 pts in 3 months

You need to learn a few things:

 

1.FICO doesn't care about dollar values of anything. An installment loan of $500 is treated exactly the same as a $50,000 installment loan. A credit card's credit line of $500 and a card with a credit line of $30,000 are treated EXACTLY the same when it comes to scoring.

 

2. FICO cares about utilization of credit. It cares about the percentage of your credit lines that are being used. It is best to keep this under 10% for the highest scores.

 

3. FICO likes to see open installment loans.

 

4. It is usally a bad idea to close a credit card account unless you have annual fees associated with it.


Starting Score: EQ 653 6/21/12
Current Score: EQ 817 3/10/20 - EX 820 3/13/20 - TU 825 3/03/20
Message 18 of 20
HiLine
Blogger

Re: FICO dropped 100 pts in 3 months


@Revelate wrote:

@jamie123 wrote:

@-NewGuy- wrote:

@jamie123 wrote:

You are running the risk of really weakening your credit profile. It happens to a lot of people during their lifetime. (I can speak from experience!) As you get more settled and have a higher income you lose the NEED for credit and stop using it.

 

My suggestions for you in order of importance:

 

1. You MUST have the medical collection removed from your reports! This is a HUGE hit to your scores right now because it is so recent but will be a drag on your scores for 7 years if it is not removed. It is not difficult to have it removed if you attack the problem now. Do it. Pay for delete. -- This is definitely the biggest factor, and should be the first thing addressed.

 

2.You should get one or two more credit cards every year for the next few years until you have 5 to 8 credit cards. You have a very thin credit report now with only two open credit cards. Sure, you have a pretty thick file now but as everything ages your file will become thinner and thinner. Credit cards are the only form of credit that you can keep open for life and you need to do that to maintain a thick credit profile. Credit card credit limits have ABSOLUTELY nothing to do with your credit scores! A $500 and a $30,000 credit card credit line are seen EXACTLY the same in FICO scoring. More cards equals better scoring . -- Not sure where the 5-8 cards comes from. Credit limits don't directly affect your credit scores, however higher credit limits do minimize your UTIL once you are using your credit, which is a good thing. Lastly, more cards don't specifically equal better scoring. If one person has five credit cards and another person has ten, with EVERYTHING else including AAoA, UTIL, credit history, etc being the same, I don't see why their scores wouldn't be the same.

 

3. This is optional and if you plan on getting an auto loan in the next year or two you really don't need it. Open a shared secured loan at SDFCU or Alliant Credit Union. FICO has a "mix of credit" scoring portion and having an open installment loan will boost your scores a bit. Your mortgage also figured into this calculation and you see how you lost points once it closed. -- Having a mix does indeed affect your score.

 

Closing credit cards is a bad idea unless they have an annual fee. Credit cards are the building blocks to a great credit score and will help you absorb the hits your scores take from adding new credit from time to time. (Auto loans, mortgages, etc.) They are a necessary evil. You should have from 5 to 8 open credit cards that you can keep open for life.


Having said the above in red, just worry about the collection for right now, and do everything possible to address it and get it removed. Priority number one.


@Anonymous

 

One of the commonalities of people that acheive a perfect 850 score is that they have 5 to 8 credit cards with an average age of 10+ years with the newest card being at least 2 years old.

 

Lastly, more cards don't specifically equal better scoring. If one person has five credit cards and another person has ten, with EVERYTHING else including AAoA, UTIL, credit history, etc being the same, I don't see why their scores wouldn't be the same.

 

You are correct, with EVERYTHING else including AAoA, UTIL, credit history, etc being the same, their scores would be the same UNTIL you add a new account or two. The person with AT LEAST 5 to 8 aged credit cards would hardly see a score drop and their scores will recover faster than a person that only has 2 or 3 cards. (OP only has 2 credit cards.)

 

You used an example of a person with 5 or 10 credit cards and I said 5 to 8 cards. I am trying to make a point that 5 to 8 credit cards are MUCH better to have on your reports than 2 or 3 credit cards. A person with 5 to 8 credit cards will look much better on manual review than a person with 2 or 3 credit cards. A person with 8 cards that are 10 years old will have 80 years of credit history, a person with 3 cards that are 10 years old will only have 30 years of credit history.


Only if they had no other accounts; 10 years history on 3 credit cards, a 5 yearish auto loan somewhere in there, and a mortgage, likely looks the same from an underwriting perspective as someone at 10 years history with 8 cards, said auto loan, and said mortgage.

 

Either one is going to get approved for whatever (assuming no derogatories) so it's pretty irrelevant when we're talking those tiers in my estimation.  

 

You're right though the difference comes in when after they're approved for something else: I do agree that people should consider building a thicker file than just 2-3 cards; I'm unlikely to ever have an idle credit report when looked at over the long term, and since I'm unlikely to have a score buffer any time soon, might as well at least try to minimize damage with an AAOA buffer.  My theory anyway, though if I had an 800+ I probably would think it irrelevant since I consider 40+ points to be solid point buffer for any minor impact new accounts would have on my scoring.

 

 


The tricky part about such a buffer is that because there are many FICO scoring models, your buffer may not be as firm if your particular lender uses a score that you don't keep track of.

 

Still, 800+ provides a pretty good buffer for anything but a derogatory Smiley Happy

Message 19 of 20
CluelessJohn
Contributor

Re: FICO dropped 100 pts in 3 months - Final Word

Just wanted to report that my FICO (based only on TU info) shot back to 812 as of 11/30/2014.  Also have a couple of FAKO's in the same ballpark.

 

Thanks again to those who replied and these forums for guidance.  Obviously getting the PFD was key.

 

I also ignored some advice and applied for 5 new CC's in late October.  3 were approved; CapOne Quicksilver ($10K), BOA Cash Rewards ($5K) and Discover IT ($2.5K). 2 were declined;  Citi Double Cash and Amazon.  Only a couple of the HP's were in the TU credit report and only BofA (and Amex) reported actual card info.  Adding the Amex card helped my AAoC because of the backdating scam.  I  know I closed my TD VISA over the phone but that is still reporting as open.  Lastly, and just for kicks, I was very aggressive in massaging my closing date balances so my utilization on ~ $50K of available credit was a shade over 1%.

 

I'm done adding cards for a while.  Going forward, I will have 6 credit cards reporting (including TD) and only will look look to increase CL's so there is no need to make pre-closing payments.

Chase Freedom Visa ($15K) Chase Freedom Flex ($15K) Chase Amazon Prime ($9K) USAA Limitless ($20K) AMEX BCE ($30K) CapOne QuickSilver ($15K) Citi DC ($20.5K) Citi Custom Cash ($5K) Discover It ($7.5K) BOA Cash Rewards ($5K) BOA MLB ($13K) USBank Cash+($10K) WF Active Cash ($8K)
FICO 8 ~800
Message 20 of 20
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