@Creditcurious74 wrote:
Update: so my other CC was updated this morning from 8730 to 0 and I gained 6 points and lost 2 pts for same scenario. I rest my case with fico system.
Rest your case? What have you proven? You are trying to make a conclusion about a complex algorithm with 2, or even a few data points?
FICO's scoring algorithm complex. No one category (payment history, utilization, etc) has a fixed weight. As your credit profile changes, each categories weight on your score changes. As you pay down your balance something else in your profile (perhaps the older account age) could dilute the impact utilization has on your score. Such a dilution could result in a reduced score along with reduced CC balances. The portion of your score attributed to utilization might go up, but if the weight utilization has on your overall score goes down, your overall score could potentially go down.
People like to quote numbers like payment history contribues to 35% of your score and utilization contributes to 30%. While these are publically disclosed numbers, they come with some fineprint. The listed numbers indicate how the categories effect the general population. The chance any of us are right in tune with the general population in every single aspect (number of accounts, exact age of accounts, exact CC limits, exact CC debt to the penny, etc) is so infinitely small, that these numbers may not apply to us. Since FICO's formulas are proprietary, we don't get to see them either.
In general, paying down balances will increase your score. But in some circumstances paying down a balance might hurt your score because of the dynamic aspect of the formula. Keep doing what you are doing and your balances will go down and your score will tend to go up.
There are two other things you should note. If your total revolving debt ever reports at 0, you will potentially lose points compared to people in the good to optimal utilization range. Moreover, the 3 Bureau monitoring service does not always match the alert with the point change. This is because the service does not trigger a recaculation for all potential point changes and when a triggering alert occurs a recalculation occurs and any point change is attributed to the alert only.
