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06-15-2014 09:22 AM
Like others posting recently, I've observed uncommon and frustrating changes with my credit score. I've been rebuilding my credit diligently for the past 3 years, and as a result my score has climbed steadily. My credit behavior is consistent, I rarely utilize more than 2% of my available credit and I often report $0 balances altogether, this has never or rarely impacted my credit score in a negative way before... until now.
My score had been sitting around 684 for a little while, and after the formula changed it dropped to 664. This was aggravating, but I accepted that this change happened as a result of the FICO scoring upgrade. Then, a few days later, when my Capital One MC balance dropped from $130 to $0, my FICO score dropped an additional 35 points to 629. So, adding it up, that's a drop of 55 points in the span of a few days, and the only thing to cause such a steep drop is the payoff a credit card that had a low balance to begin with. This is the lowest my score has been in a year, and it's frustrating for so many reasons. 1) I've worked hard to get my credit score where it was, and I feel like I've been punished for practicing good behavior by keeping my balances low and paying my bills. 2) I was on the verge of applying for a car loan, and this score change is going to negatively impact the interest rate I receive and 3) I've called MyFico several times, and the supervisors there claim that my second score drop of 35 points happened only because I paid an already small balance down to $0, yet none of them can explain satisfactorily why it dropped so severely.
I would expect a drop of 35 points if I failed to pay my bills on time. But I don't expect to be punished when I practice responsible credit behavior. This leads me to believe that there is nothing I can do to control my own credit destiny. Who else has experienced this recently? Completely frustrated.
06-15-2014 10:02 AM - edited 06-15-2014 10:29 AM
I understand. However, i've kept my utilization to 0-2% for the past three years and I've only experienced such a sharp drop in my FICO score one other time, which I'll get to in a moment. My credit behavior has been consistent. So why, all of a sudden, would my score take such a dramatic hit now? Why this time? Where is the consistency from FICO? There doesn't seem to be any. Again, a 35 point punishment for simply paying one credit card bill from $130 to $0. Not only does that hardly seem fair, it also doesn't make any sense. There has to be more to it than this.
Coincidentally, something similiar happened last June, at exactly the same time. Last June 15th, my score dropped about 30 points. It was the only other time since joining MyFico in 2012 that I've observed a dramatic downswing to my score. The credit alert I received at that time justified this by saying that my Barclay MasterCard balance increased from $0 to $35 (an increased utilization which, according to your explanation, should have only helped my score, not damaged it), a common and unremarkable enough thing that happens with all consumers and had never impacted my score until that one particular occasion. So, a small and very common balance increase last year at the exact same time also resulted in an uncommon score change. So, is this a June thing? Or just an erratic and completely unpredictable score change thing? Again, there seems to be no consistency. If a formula is applied constantly, then the results should be constant as well, no?
06-15-2014 11:05 AM - edited 06-15-2014 11:10 AM
A few more quick things- I actually am carrying a balance on another card of about $366, so when I paid that Cap One card balance in full, my overall utilization hardly changed. That can't be the complete reason why my score dropped an additional 35 points. The alert I received on the same day as the score drop states the following- "No new activity reported on your non-mortgage accounts". That's also hardly a valid explanation for an extreme score decrease.
So my score drop apparently happened out of thin air and no one at FICO is capable of offering me a good reason why.
Its interesting to note that my equifax score at equifax.com actually INCREASED in the last week by about 5 points, bringing it to 694. I know it's a different scoring model, but the information comes from the exact same report. Apparently, they don't have an issue with my utilization and my consistent credit behavior.
06-15-2014 11:13 AM - edited 06-15-2014 11:15 AM
Your score dropped most likely because of the scoring model change. The scores went from a 98 model to a 08 model, so the formula used to score your report is different. It likely isn't anything that you did that caused the change. It is simply that the new models score things differently such as recent derogs, inquiries, account age, and AU accounts. What that means is, for example AU accounts used to boost your scores more, now they don't at all (or at least they count for very very little) recent derogs hurt a lot more than they used to, etc...
06-15-2014 11:22 AM - edited 06-15-2014 11:31 AM
I don't know the answer to your dilemma.
However, it's worth pointing out a couple of things.
One is that the credit world is often plagued by reporting lags, and you have to be very careful about this sort of issue.
For example, my TU 08 score from Discover is calculated about a week before the statement date (when I get the score), and it's further possible that the report used to calculate the score doesn't have the updated information that I might imagine it has.
Another consideration is that there may be things going on with your report independent of what a monitoring service tells you, and the stated reasons for score changes may not be all that informative.
What I'd do is ask yourself just what has changed on your actual reports from time A to time B, and then ask what effect that has on score.
06-15-2014 11:23 AM - edited 06-15-2014 11:24 AM
Yes, but refer back to my intial post. My score dropped TWICE in the last week or two. The first time was by 20 points, and the reason given was the new scoring system. The second time, the one I'm addressing, was by 35 points and a reasonable explanation has yet to be given. I'm three years removed from any derogatory activity. A 55 point drop is dramatic and extreme.
06-15-2014 04:54 PM
What is the credit line on the card carrying $366?
Also, although your frustration is understandable - I wouldn't pursue the line of thinking that says "It doesn't make sense!" The FICO models are mathematical and applied evenly across all people. Just because we may not understand every factor that goes into it, doesn't mean it's a fickle system.
But it's really difficult to try to help you guess at this, without a full layout of all your cards, balances, other debts etc.
06-16-2014 03:38 AM
06-16-2014 08:36 AM - edited 06-16-2014 09:21 AM
I'm totally baffled by the new score as well. My Fico scores jumped from a 573 to 577 for adding a new trading line. Then in turn, drops 1 point for an inquiry not involving that new TL. A week later, it goes to a 591 for bringing an account back current (30 days late) and reducing the balance by $150 dollars. Here's the kicker, I reduced my utilization from 43% to 27% across all my accounts and my score has not budged. I don't know how to get my credit in shape to refinance my home if I don't understand the rules.
I have some experience in credit matters, and I personally would not attempt to interpret small point changes.
One of the problems with doing so is that report updating and score calculations often have significant lags. For example, suppose that I pay off my CC bill today. The resulting $0 balance may not show up on my reports for several weeks, and a fresh score based on the updated report may not show up for several weeks after the report update.
Beyond this, there are all kinds of things going on with your reports that may cause point changes, and unless you know what all of them are, it's impossible. For example, in general, if your report doesn't change, the score will go up over time, because of increased account age, derogatories aging, inquiries dropping off, and so on.
What I'd suggest doing is focusing on your report, trying to optimize what's on it as best you can. Most of the big categories that negatively affect the score are well known ones -- derogatories, utilization, lots of new accounts.