Understanding FICO® Scoring

[thomasil74]

I talked to Citibank and I got them to reopen a credit card account that was closed for two years. 

Since I have paid a lot of my balances over the past year and my score has increased they gave me a credit limit increase from the previous $7,000 to $17,500.  I let the credit card report a balance of $26.  Last week after it posted the $26 balance on all 3 credit bureaus, I got an alert from myFico saying that my Equifax Fico dropped 8 points from 766 to 758.  This week I PIF the $26 balance in order to not get charged interest.

The reasons for score going down 8 pts are:

A balance increase on an account may lower your FICO® score.

1 of your previously dormant accounts reported recent activity.

What should I do next month?  Keep balance at $0?

[Vanyel]

You reactivated a dormant account.  Thats a bit like a new credit line on the FICO scores.  The good news is that it will only affect you for a month or 2, unlike a brand new account.  And the UTIL is going to help you go back up and beyond what you lost.  Don't panic this is a temporary short term drop.

Van

Edited to actually answer your question...

Continue to use that card and don't let it go dormant again.  If nothing else just put a tank of gas on it every few months or so, or move it to the top of the pile of cards that you use regularly, either way will be fine.

Message Edited by Vanyel on 11-22-2007 11:25 AM

[haulingthescoreup]

As Van said. The identical thing happened on my scores, and they bounced right back up.

[thomasil74]

Ok I feel better know. The one thing that is puzzling is that I thought FICO was a snapshot of my current credit report status. If FICO knows that this account was previously a dormant account then it must keep track of previous activity, which I did not know it did.

[haulingthescoreup]

Good observation! It's a snapshot, but they seem to know when something hasn't been used in a while.

Was your card actually closed, and they re-opened it? If so, you're a rare and talented individual! That's hard to do. Did they tell you that they would report it as open from whenever you originally opened it, keeping the history? If not, it's showing as new, so that would explain the score drop. Mine was a card that I was angry at and parked it for a while, so since it hadn't reported for 5 months, I had the brief drop.

At any rate, I think you will recover very quickly.

[MeganML84]

Yet another enigmatic (I am making up my own words today) aspect of the FICO scoring model.

Next thing you know your BMI will be a factor of your FICO score.

[Timothy]

I doubt the snapshot theory more and more everyday.

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thomasil74 wrote:
Ok I feel better know. The one thing that is puzzling is that I thought FICO was a snapshot of my current credit report status. If FICO knows that this account was previously a dormant account then it must keep track of previous activity, which I did not know it did.

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[thomasil74]

This account was closed for 2 years. At the expense of a hard inquiry I got them to open it two months ago. The hard inquiry was on Transunion. Equifax was the one that dropped 8 points when I let the card report $26.

[concorduser]

That is interesting. I am getting an optima oasis account in place of an amex account that is closed in 95. From what I hear my new oasis card would the first date I opened the account that is 93 or so. Once oasis starts reporting would I see a drop in my scores?