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New Visitor
highergroove
Posts: 2
Registered: ‎04-25-2013

I just lowered my credit utilization and my score dropped 20 pts

My credit utilization was at about 90% and my score was 715.  I just pid down a credit card that was at 90% utilization to about 33% utilization and my score dropped 20 pts.  NOTHING else chnaged. No new credit inquiries, no late payments, no new cards, no closures of cards.   I am shocked.  I paid it down in hopes of getting a better rate on a refinance.  I paid the other that was at 7% to about 33% as well and that hasn't hit my score yet but I am afraid.  What the hell????

Moderator
guiness56
Posts: 22,408
Registered: ‎01-17-2008

Re: I just lowered my credit utilization and my score dropped 20 pts

Hi and welcome to the forums.

 

Your score definitely should not have dropped.  What report are you looking at?  One directly from the CRA or a third party report?

 

Is this your FICO score or a FAKO?

Established Member
nickf4rr
Posts: 62
Registered: ‎01-11-2013

Re: I just lowered my credit utilization and my score dropped 20 pts

Hi!  Welcome to the forums!

 

You really have to look carefully, almost line-by-line at each of the reports that generated the scores.  Sometimes a really minor change, or series of minor changes could cause this.  

 

For example, did you have an old closed account that dropped off your report?  An old account that dropped (which wouldn't trigger a credit alert or even be noticed unless you're looking at the report) could cause your AAoA to drop, and thus drop your score.

 

Just to give you an example, my TU and EQ scores are 40 points apart--and the only difference between the two reports is that my EQ AAoA is higher and I have more accounts reporting on my EQ report.

 

Of course, guiness56's questions also apply...anything other than FICO isn't really of interest in this thread...

Starting Score: 01/12/2013 EQ 683
Current Score (myFico): 5/8/13 TU 734, EQ 738 05/04/13 EX 722
Last App 05/3/2013 - Off to garden for the rest of the year!

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New Visitor
highergroove
Posts: 2
Registered: ‎04-25-2013

Re: I just lowered my credit utilization and my score dropped 20 pts

It is on Credit Karma (Transunion is what they use I believe).  Before I made my payment, I used the score simulator it said if I paid off the amount I wanted to (down to about 33% for each card), it would lower the score (it riased it if I paid $3000 but lowered anything above that - I thought it was just assuming I was paying one completly off), but I thought it was a mistake.  Then I sigend up for Freescore.com and and also did the simulator (it used the Transunion as well) and it did the same thing).  

 

 

Established Member
nickf4rr
Posts: 62
Registered: ‎01-11-2013

Re: I just lowered my credit utilization and my score dropped 20 pts

[ Edited ]

highergroove wrote:

It is on Credit Karma (Transunion is what they use I believe).  Before I made my payment, I used the score simulator it said if I paid off the amount I wanted to (down to about 33% for each card), it would lower the score (it riased it if I paid $3000 but lowered anything above that - I thought it was just assuming I was paying one completly off), but I thought it was a mistake.  Then I sigend up for Freescore.com and and also did the simulator (it used the Transunion as well) and it did the same thing).  

 

 


Ahhhh...I'm going to try to pounce on this one before Ilecs does, but I belive you're using what is referred to around here as "FAKO" scores.

 

I use Credit Karma too, it's a great resource for seeing my TU file for free--but the scores they're using aren't really indicative of what scores a lender might actually use.  It's like someone else is essentially guessing your FICO scores based on this activity.

 

Examples:

My Credit Karma FAKO Score (based on my TU Report:smileyhappy: 721

My FICO score (based on myFico TU Report pull as of yesterday): 667

Credit Karma/FICO Score Difference: 54 Points using the SAME DATA.  Not to mention lenders see a 667 and a 721 much differently.

 

I can guarantee you that your FICO scores will improve (over time) if you dip below 10% total Utilization across all your credit cards.  It may take a while--I paid everything off a few weeks ago, and I'm still waiting for the last two PIFs to hit my credit report and scores.  Every time one payoff hits, my score jumps.  As far as what could be affecting your FAKO scores, there are many other things in your file (new accounts, HPs, AAoA, other old accounts aging off, etc.) that might have an affect on your FAKO score that you wouldn't even know about.

 

I'm not going to try to sell you on a product, but if you're in the market for a particular type of credit, try pulling a true FICO score from here (myfico.com) or look for any of the other ways you can get a true picture of your "real" score, i.e. your FICO.  I like the ScoreWatch product since it gives weekly updates and I'm a bit compulsive like that, but the FICO Quarterly Monitoring product ($4.95/mo, $49.95/yr) should serve your needs perfectly fine if you're in the market for credit.

 

Credit Karma, Credit Sesame, etc are great for monitoring what's going on with your reports.  Credit Sesame actually seems to report differences on my credit report a little faster than ScoreWatch does and their score updates are good for watching trends--but if you're about to go out and apply for credit, pull your FICO score from the CRA the lender will use.  The forums here are good at letting you know what CRAs lenders use.  If you get denied for credit, they will give you a FICO score which won't match up at all with the Credit Karma score.

 

Just so you know, my CS score is 682.  My TU FICO (which I pulled a few days ago) is 667, my EQ FICO is 706.  CS uses EX, and even though the information in my EX CR has basically the same info as my TU (save for 5 hard pulls, most recent of which was >6 mos.) the scores are 15 points apart.

 

If you live in PA, you can get a free FICO score based on your EX report (so you can watch Credit Sesame and a real FICO score head-to-head).  Details on that are in the Credit Scoring 101 link below.

 

Here are some links I found helpful:

 

Credit Scoring 101 - There's a bit in there about FICO and FAKO.

CC Payoff Tactics

 

I'm sure someone else will pop up with more information soon. :smileyvery-happy:

Starting Score: 01/12/2013 EQ 683
Current Score (myFico): 5/8/13 TU 734, EQ 738 05/04/13 EX 722
Last App 05/3/2013 - Off to garden for the rest of the year!

Take the myFICO Fitness Challenge / myFICO Forums Common Abbreviations
New Contributor
ABuckNow
Posts: 107
Registered: ‎03-03-2013

Re: I just lowered my credit utilization and my score dropped 20 pts

I have found the score simulators at other sites to be very misleading.

I used to use freecreditscore.com or something like that - it was experians.  It said that if i raised the credit limit on my CC, my score would jump (i only have one CC).  the credit card is a secured card unfortunately...but i have a lot more money than credit so i sent them a couple grand to "increase" my limit.

Know what affect that had on my fico score?

0

didn't budge.

So be careful following advice from fako simulators.

Established Member
nickf4rr
Posts: 62
Registered: ‎01-11-2013

Re: I just lowered my credit utilization and my score dropped 20 pts

Actually...did you study whether or not a CLI on a Secured Credit card has a difference?   The scoring algo may account for the difference between secured and regular revolving TLs--and factor out any CLI on the secured card.

 

The score simulator may have made an assumption (i.e. raising your CL on a card would lower your UTI), but it turns out that the assumption was faulty because of other things that happened (i.e. you had 0% UTI to begin with, and continued to have 0% UTI after the CLI.)

 

 

Starting Score: 01/12/2013 EQ 683
Current Score (myFico): 5/8/13 TU 734, EQ 738 05/04/13 EX 722
Last App 05/3/2013 - Off to garden for the rest of the year!

Take the myFICO Fitness Challenge / myFICO Forums Common Abbreviations
New Contributor
ABuckNow
Posts: 107
Registered: ‎03-03-2013

Re: I just lowered my credit utilization and my score dropped 20 pts

It's generally thought that fico doesn't figure secured and unsecured differently.

There's nothing on any of the three CR's that indicate it's secured (that I can tell at least...)

I had around 3% util before and after.

Live and learn, i suppose!

Established Member
nickf4rr
Posts: 62
Registered: ‎01-11-2013

Re: I just lowered my credit utilization and my score dropped 20 pts

Oh, sweet, I didn't know that!  Maybe the FAKOs do.

 

Did you pull from all three CRAs?  I've noticed my EX file is way thicker and more detailed than my TU or EQ files, but I haven't read enough around here to see what differences in the true data there are across the three of them.  Only thing i've noticed is that EQ and EX tend to think of some accounts that were actually closed a long time ago as "open", whereas TU sees them as definitely closed.

Starting Score: 01/12/2013 EQ 683
Current Score (myFico): 5/8/13 TU 734, EQ 738 05/04/13 EX 722
Last App 05/3/2013 - Off to garden for the rest of the year!

Take the myFICO Fitness Challenge / myFICO Forums Common Abbreviations
Valued Contributor
jsucool76
Posts: 2,770
Registered: ‎12-11-2011

Re: I just lowered my credit utilization and my score dropped 20 pts

Nick is right. While credit karma is great for monitoring your reports, the score(s) it gives you (with the exception of vantage, which some lenders use(chase used it for my app)) are useless. As is the score simulator on their site.

Utilization is generally thought of as making up for 35% of your score, plus paying off balances is always a great thing. Im sure if you lowered your balances, your actual fico went up.
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