Nicely done experiment and well written report! It supports what I've often seen stated on this forum, and also experienced myself in the past in a similar experiment: EQ in particular hates (or at least used to hate) all-zero balances. In my little experiment, done about two years ago, I alternated several times between total balances of $0 and $10 (on one card, didn't matter which), and got my EQ and TU FICO scores after each change. It was quite reliable: with the $10 balance total, I had 813 FICO scores on both EQ and TU; with zero balance, TU went up to 819, EQ down to 809. That was exactly what I had seen predicted here.
But recently, it seems to have changed. I prefer not to bother with the small residual balance unless I have some reason to maximize my score, so I've been at all zero for a number of months. I got an offer from FICO for reduced-rate scores, and I realized I hadn't actually pulled mine for some time, so I took the offer even though I hadn't had time to get the $10 residual in place. (Yeah, sucker for a bargain.) And I found just the opposite behavior as previously: EQ was higher (807) than TU (799). The lower scores than previously didn't surprise me;, since I recently took on a larger mortgage since the 813 etc. reported above. But I was surprised that TU seemed more sensitive to the zero balances than EQ. And the infamous "factors" text confirmed this: For TU, "Your FICO score was hurt because you are not currently demonstrating active revolving credit management.", while EQ thought I was good on that (and the other) criteria. So I'm wondering whether anyone else has noticed this sort of change.
By the way, these scores, just above and below 800, give an interesting view of how nonsensical the "Your risk to the lender" report can be. Supposedly, TU thinks I'm twice as likely to default (2%) than EQ does (1%). I know, it's all statistical, and there have to be boundaries, but such a proportionally enormous difference can't be realistic in an individual case.
Starting Score: EQ 804 - (April 2009)
my-own-fico wrote:It's at a time like this that you wish Score Watch would send you a credit alert whenever a balance decrease takes place, as in the case of a balance increase. As I too now work my way up, most of it within a single score alert time frame, it occurred to me there's little opportunity to monitor the EQ FICO score ascent. Any suggestions?
I don't use Score Watch, but you can get alerts for balance increases or decreases from Equifax Credit Watch. You can specify a balance change amount, or percentage, and it alerts regardless of the sign of the change. I've found it very useful in confirming just when my balance is reported (only when it changes, of course). One disclaimer: I'm not sure this product is available any more for new subscriptions.
I have reestablished credit over the last couple years
Duke-of-Earl wrote:Nicely done experiment and well written report! It supports what I've often seen stated on this forum, and also experienced myself in the past in a similar experiment: EQ in particular hates (or at least used to hate) all-zero balances. In my little experiment, done about two years ago, I alternated several times between total balances of $0 and $10 (on one card, didn't matter which), and got my EQ and TU FICO scores after each change. It was quite reliable: with the $10 balance total, I had 813 FICO scores on both EQ and TU; with zero balance, TU went up to 819, EQ down to 809. That was exactly what I had seen predicted here.
But recently, it seems to have changed. I prefer not to bother with the small residual balance unless I have some reason to maximize my score, so I've been at all zero for a number of months. I got an offer from FICO for reduced-rate scores, and I realized I hadn't actually pulled mine for some time, so I took the offer even though I hadn't had time to get the $10 residual in place. (Yeah, sucker for a bargain.) And I found just the opposite behavior as previously: EQ was higher (807) than TU (799). The lower scores than previously didn't surprise me;, since I recently took on a larger mortgage since the 813 etc. reported above. But I was surprised that TU seemed more sensitive to the zero balances than EQ. And the infamous "factors" text confirmed this: For TU, "Your FICO score was hurt because you are not currently demonstrating active revolving credit management.", while EQ thought I was good on that (and the other) criteria. So I'm wondering whether anyone else has noticed this sort of change.
By the way, these scores, just above and below 800, give an interesting view of how nonsensical the "Your risk to the lender" report can be. Supposedly, TU thinks I'm twice as likely to default (2%) than EQ does (1%). I know, it's all statistical, and there have to be boundaries, but such a proportionally enormous difference can't be realistic in an individual case.
Wait, is the SIZE of my mortgage factored into my FICO??!!! I live where houses cost more. That does not seem fair.
Am I being penalized for doing a Re-fi? I refi'd with no cash out, so my mortage started over with 100% due, nothing paid off. Are you penalized for % paid/not paid too? I am not even underwater... again not fair.
It will be years until a new mortgage gets a good ratio. 
Please tell me I am misunderstanding this tidbit of information.
crunching_numbers wrote:
Wait, is the SIZE of my mortgage factored into my FICO??!!! I live where houses cost more. That does not seem fair.
Am I being penalized for doing a Re-fi? I refi'd with no cash out, so my mortage started over with 100% due, nothing paid off. Are you penalized for % paid/not paid too? I am not even underwater... again not fair.
It will be years until a new mortgage gets a good ratio.
Please tell me I am misunderstanding this tidbit of information.
Installment loan balances have a very small effect on FICO score, if any. I, too, live in an area in which basically everyone has jumbo loans, so I would be annoyed if this had a major effect on scores. It doesn't.
The primary negative FICO pressure of a refinance is not that you've reset the loan to "100%" utilization, but rather because there's a new account reporting, a new inquiry associated with the loan application, and a possible effect on average account age. However, in my experience the effect is temporary. When I refinanced a home equity loan, there was a small drop in my FICO scores, but within a few weeks it was back where it had been for a while. As I have paid down my loans, there really hasn't been any effect on FICO scores. My credit card balances are what drive the small fluctuations in score.
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