FICO score drops have me TOTALLY confused.

[SeandSki]

I'm at a loss here.  My FICO score seemed to be going up.   I don't carry much (any) debt, pay all my bills on time, had just a few small balances on two credit cards and then applied for (and received) a Bill Me Later account for a new laptop.   I paid off the balances on the credit cards,  (down to 0 then up to a current balance of $29.95 for some computer accessories), made my first payment on the laptop and then my FICO score dropped from 740 to 726 and then today... down to 717.   

What's going on?  The credit alert said:

Your FICO® score went down on a day when there were no credit alerts on your Equifax Credit Report™. This can happen if:

• There was a change on your credit report that lowered your score but did not trigger an alert. For example, the balance on an account might have increased enough to lower your score, but not enough to trigger a balance increase alert.
• You moved from one category of credit users to another as time passed. For example, you may have transitioned from the category "consumers with a new credit history" to the category "consumers with a two- to five-year credit history". As a result, your credit report is evaluated differently, causing a slight change in your score. The good news is that moving between categories like this usually offers you the potential to reach a higher FICO® score in the future.

Is this really a good thing?     Should I be doing anything different?   I don't really need credit... (i.e. no car payment, no mortgage etc.) I'm just flummoxed by the drops.. I thought I was doing everything right.

[Anonymous]

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@SeandSki wrote:

You moved from one category of credit users to another as time passed. For example, you may have transitioned from the category "consumers with a new credit history" to the category "consumers with a two- to five-year credit history". As a result, your credit report is evaluated differently, causing a slight change in your score. The good news is that moving between categories like this usually offers you the potential to reach a higher FICO® score in the future.

Is this really a good thing?     Should I be doing anything different?   I don't really need credit... (i.e. no car payment, no mortgage etc.) I'm just flummoxed by the drops.. I thought I was doing everything right.

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It appears that there's a good chance that you were 'rebucketed'. Also, is the BillMeLater account showing as maxed out (that may have cost you a few points for the INQ, the new account, and the balance in relation to limit). The good news is that as your new account ages, and your balance goes down, your score will rise. And, if you were rebucketed, your score very likely has the potential to go higher than before.

[SeandSki]

"Re-bucketed".  I did a little search on here to find out what that meant.  Thank you for that info!   I certainly hope that's the case.  The Bill Me Later Account isn't anywhere closed to maxed out.  I only charged $900 and made the first payment $300.   I'm planning to pay it off in two more payments.  

Thanks again for the reassurance.  )

[RobertEG]

"Re-bucketing" is not a total mystery.

FICO scores you against a peer group of similar consumers. Statiscal analysis 101.

There is no such thing as a single FICO algorithm.

FICO has at least a dozen algorithms that it uses under any verion of their scoring.

They parse your CR, and look for such key factors as "thin" or "thick" credit file.  A file with less than 2-3 years of history is thin.

Then they also look for "dirty" or "clean" files.  A file that shows a major derog within the past two years (60+ late, CO, CA) is dirty.

Then, % util of accounts.  High util has categories of their own, such as less than 10%, and so on, up to max penatly for 100% or over-limit.

Then, minor placements based on lenghth of account history, etc.

So if your credit history shifts on one or more orf rhese factors, you will never know when or why.  The definitions of these scoring algorithm "buckets are closely guarded trade secrets by Fair Isaac.  New scoring algoithm, and weightng of everyting in your credit file.

FICO then evaluates your score under a new algorithm based on your closest peer group.

Those are what are commonly called "scoring buckets."

For example, a 30 or 60-day late in one algorithm may count more or less once you are scored under a different algorithm.

That is the trade secret way of credit scoring.

[marty56]

Bill me Latter should not show up on your CR other than as an INQ.  Even my  NewEgg card does not show up.

[SeandSki]

Thought I'd post an update here and thank everyone for all the helpful advice and community over these past years.  As I mentioned in an earlier post, I decided to just wait out the negative aspects of my credit history.  I continued to make regular on-time payments to my student loan, used a secured credit card judiciously, and openend a savings account for items that I need or want.  

Incredibly, my FICO score (according to this site) is now a 791!

Wow.   It's been a long time coming.  I will never make the same mistakes I made in my youth and now, while I hesitate to even consider the debt associated with a mortgage...  I am qualified.   A bank recently pre-approved me for an mortgage amount that made my head snap back in disbelief.    

So...to everyone out there wondering if it ever gets better...the answer is yes. 

Yes it does. 

[MarineVietVet]

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@SeandSki wrote:

Thought I'd post an update here and thank everyone for all the helpful advice and community over these past years.  As I mentioned in an earlier post, I decided to just wait out the negative aspects of my credit history.  I continued to make regular on-time payments to my student loan, used a secured credit card judiciously, and openend a savings account for items that I need or want.  

Incredibly, my FICO score (according to this site) is now a 791!

Wow.   It's been a long time coming.  I will never make the same mistakes I made in my youth and now, while I hesitate to even consider the debt associated with a mortgage...  I am qualified.   A bank recently pre-approved me for an mortgage amount that made my head snap back in disbelief.    

So...to everyone out there wondering if it ever gets better...the answer is yes. 

Yes it does. 

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Thanks for coming back with an update and congratulations on your success!

From a BK years ago to:
EX - 3/11 pulled by lender- 835, EQ - 2/11-816, TU - 2/11-782

"Some people spend an entire lifetime wondering if they've made a difference. The Marines don't have that problem".

[Anonymous]

Congrats Seandski!

Great work and thanks for the update!