Understanding FICO® Scoring

[BIGBOTTOM]

Hi,

Newbie here. I am repairing my credit after a bankruptcy in Sept 2004. Before the BK I had outstanding credit and never a late payment and then a reversal of personal fortune happened suddenly putting me financially under. I had no late payments before or after the BK and paid off everyone possible before I filed. I was able to keep all my other accounts "pure" and in good standing. I only filed on two CC's that I just had no choice on.

In May 2007 I checked my credit report and Fico scores. I was actually surprised that my score was 727. After I recieved a large sum of money as back pay from L and I. I decided to pay off my mortgage 9 years early with the money. I also paid $6,000 off on a CC's. in the month of June. It is now the middle Aug and my credit score has actually dropped to 709!!!! What is up with that? I don't understand. Was it a mistake to pay off my mortgage? Does it take 3 months to show the decrease in my CC debt?  I have been patiently waiting for my score to improve just a little bit more before apply for a new credit card, so i can do a balance transfer on my remaining credit card debt because the difference is 9.99% on the new card verses 24.99% on my current one.

Anyone have any ideas of why I am seeing a decline instead of an increase? The only thing I can think of is that I wrote to each Credit Reporting agency to correct some mistakes in the reporting of my BK and that is when my Fico score dropped from 727 to 709.

Thank for any ideas.

[Brammy]

Have you pulled a new credit report to see what actually is and is not reporting?  Was your mortgage your only installment loan?  Had the same thing happen to me when I paid off my car. If its just that you now have no installment loans reporting or the amount owed on open loans has increased in proportion to the original amount percentage wise, dont worry, it gets better.

[smallfry]

Let's see. FICO 727 with a mortgage. FICO 709 without a mortgage. Hmmm. What situation would I prefer? No contest. OP congrats on paying off the house.

[BIGBOTTOM]

Thank you Smallfry. I was just thinking about this today and yes, I would rather have my mortgage paid off any day and forget about the FICO score!

In reviewing my most recent credit report is appears that the reporting by the credit card companies is way behind and not showing the huge payments made on two cards. That is probably why the lower score.  I imagine in a couple of months I will see an improvement.  Since I am not buying another house or a car..I guess it doesn't matter all that much.

Thank you everyone, I have learned so much this week from this board.

[smallfry]

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BIGBOTTOM wrote:

Thank you Smallfry. I was just thinking about this today and yes, I would rather have my mortgage paid off any day and forget about the FICO score!

In reviewing my most recent credit report is appears that the reporting by the credit card companies is way behind and not showing the huge payments made on two cards. That is probably why the lower score. I imagine in a couple of months I will see an improvement. Since I am not buying another house or a car..I guess it doesn't matter all that much.

Thank you everyone, I have learned so much this week from this board.

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I've simplified my credit by having all my credit cards cycle with a few days of each other. In my case it falls between the 2nd and the 7th of every month. This way all are reported by the 15th to all CRA's by the 15th. If I want to know where I stand I just pull a score on say the 20th of the month. This would avoid what happened to you. 709 is decent and I am sure it will go up as you go along anyway. Again congrats on the mortgage payoff.