Paid Down Debt and Fico Score decreased

[Anonymous]

Balances decreasing would not lower your score.

FICO scoring looks at number of cards (and accounts) with balances, individual card utilization and aggregate utilization.  Any of these numbers decreasing would result in scores either staying the same or increasing, not decreasing.

If you are seeing a score decrease it is because of something outside of the utilization sector of the pie of all you have been doing is paying down your balances.

[Anonymous]

Have you done a thorough check to see if any old accoutn dropped off? Perhaps an old washer/dryer leasing account or a store card closed 8 years ago?

Is it possible a new account was activated without an inq? Just out of curiosity where does that chase card ranked in terms of your CL? Is it the highest limit card?

[jamie123]

OP you need to think about credit scores this way: Everyone starts out with a perfect 850 score and you get nicked points for any deficiencies that vary from perfect. The way to raise your scores is to eliminate any deficiencies that you have control over on a day to day or month to month basis.

These are some deficiencies that you have control over that are costing you points:

• Higest scores are achieved by using the AZEO technique. All credit cards report a zero balance except one that reports a small balance that ranges from $1 to less than 9% of that card's credit line. This is the way to groom your scores to be the highest they can be before a credit application.
• You get nicked points for every card more than one that reports a balance.
• You get nicked points when total credit card utilization is more than 9% of the total of all your credit card credit lines.
• You get nicked points when an individual credit card reports more than 9% of its credit line.
• You get nicked points when more than 50% of your credit cards report a balance.

My advice:

• Pay off as many credit cards as you can to $0 except for one. With each extra credit card that reports a $0 balance you will see a small bump in your scores. (Especially mortgage scores)
• Pay off enough credit cards so that less than 50% of your credit card accounts are reporting a balance. You will see a slightly higher bump once you pay the card off that takes you from over 50% to under 50% than when you paid the other cards off.

I know it's not easy, but start paying off your credit cards with the one that has the smallest balance first and move on to the one with the next highest balance. This is called the "Snowball Method". And of course it goes without saying that once a card reports $0 you need to keep it that way.

[Anonymous]

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wrote:

Have you done a thorough check to see if any old accoutn dropped off? Perhaps an old washer/dryer leasing account or a store card closed 8 years ago?

Is it possible a new account was activated without an inq? Just out of curiosity where does that chase card ranked in terms of your CL? Is it the highest limit card?

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I did look last night a little deeper.  An old card that hasn't been used in years decreased in Credit Limit.  The Chase Card is not my highest limit card.  I haven't had anything drop off the report in the 120 days.  My mortgage broker advised that he run a report to search further and see what he can find?  Not sure that's the best thing to do because it would be a hard inquiry.

Thank you!

[Anonymous]

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OP you need to think about credit scores this way: Everyone starts out with a perfect 850 score and you get nicked points for any deficiencies that vary from perfect. The way to raise your scores is to eliminate any deficiencies that you have control over on a day to day or month to month basis.

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I don't know if that's the best way to look at it.  For starters, one generally is going to need to have their AoYA > 1 year, AAoA of 7+ years and AoOA somewhere in the 15-20 year+ range.  If the "age of accounts" factors are all top-notch, at that point you can consider an 850 score possible and then start deducting points based on the many things you mentioned above.  I just think it's important to clarify that an 850 isn't possible without favorable age of accounts factors in place.

[jamie123]

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wrote:

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OP you need to think about credit scores this way: Everyone starts out with a perfect 850 score and you get nicked points for any deficiencies that vary from perfect. The way to raise your scores is to eliminate any deficiencies that you have control over on a day to day or month to month basis.

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I don't know if that's the best way to look at it.  For starters, one generally is going to need to have their AoYA > 1 year, AAoA of 7+ years and AoOA somewhere in the 15-20 year+ range.  If the "age of accounts" factors are all top-notch, at that point you can consider an 850 score possible and then start deducting points based on the many things you mentioned above.  I just think it's important to clarify that an 850 isn't possible without favorable age of accounts factors in place.

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I did say, "The way to raise your scores is to eliminate any deficiencies that you have control over". The OP was looking at raising his scores in a short period of time and the only way that he can do that is by things he can change now. AAoA and AoOA don't count because the only thing that will better them is time and not applying for any new credit. He really has no short term control of them.

I do think that the way that I described looking at a score was very accurate. You start at 850 and deduct points depending on how far a metric varies from perfect. I bet they did this when they first designed the FICO scoring model. They took a group of very credit worthy people and found the metrics that defined how they rank in the world of credit. These metrics are what we talk about on the forum all the time: AAoA, AaOA, AaYA, number of cards, number of installment loans, age of installment loans, CC UTI, Total UTI, types of credit, mortgage, how many cards are reporting a balance more than one, is the percentage of cards reporting a balance 50% or higher, etc.

They then built an algorithm to turn all these metrics into a number between 300 and 850 that define a person's credit risk. You would have to do it this way. You need to know what kind or kinds of credit profile deserves a perfect 850 and work backwards from there. You need to determine the range of each metric that deserves a perfect score first. (And they have been tweaking this algorithm for the past 50 years behind the scenes.) That's why so many things we add to our credit reports, hit our reports as a negative first before turning positive over time. You get smacked with a couple of negatives when a new account is added and the negatives slowly fade away and then turn positive.

That's why you bring up needing favorable AAoA and AoYA to get to 850. You have discovered what the metrics for that part of the algorithm need to be to get an 850 score. If you don't have an AAoA or AoYA that fall into the perfect range, you get nicked points. The farther your AAoA and AoYA are from being perfect, the more points you get nicked.

[Anonymous]

Right, I just think it's important to inform everyone that an 850 cannot be achieved without having the age of accounts factors being maximized. 

[jamie123]

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wrote:

Right, I just think it's important to inform everyone that an 850 cannot be achieved without having the age of accounts factors being maximized. 

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I know you guys have been batting the AAoA number around lately. What is the youngest AAoA that someone has achieved an 850 assuming that AaYA is at least 2 years old or not a factor?

[Anonymous]

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wrote:

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wrote:

Have you done a thorough check to see if any old accoutn dropped off? Perhaps an old washer/dryer leasing account or a store card closed 8 years ago?

Is it possible a new account was activated without an inq? Just out of curiosity where does that chase card ranked in terms of your CL? Is it the highest limit card?

---

I did look last night a little deeper.  An old card that hasn't been used in years decreased in Credit Limit.  The Chase Card is not my highest limit card.  I haven't had anything drop off the report in the 120 days.  My mortgage broker advised that he run a report to search further and see what he can find?  Not sure that's the best thing to do because it would be a hard inquiry.

Thank you!

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I wouldn't spend an inq on this unless you are hunting for mortgages and even then I would try to figure out on my own. If a card has decreased in spending limit I think you might focus on that first. It could very well be the trigger that lowered your score. Perhaps some more senior contributers could weight in.

[Anonymous]

I wouldn't think that anyone has reported an 850 credit score with an AAoA of less than 7 years. From what I've read between 7 and 8 years is usually the point where a top-score can be achieved.