Score drop after balances decrease

Anonymous · ‎09-05-2017

I'm in the middle of a re-fi and qualified with a middle score of 695. One of my authorized user accounts was recently paid off. This decresed my DTI and my CC utilization. But when I ran this through the simulator the score dropped. Why the heck does that happen?

Anonymous · ‎09-05-2017

It sounds like you have already done this, but the altered balance has not yet materialized on your credit reports. While you are waiting for that to happen, you have run the change through a simulator, which is predicting a score drop. Is that right?

Which simulator was it? All simulators are unreliable to some extent, but some are worse than others. And is it the mortgage score that is being simulated -- or is it FICO 8?

Once the new $0 balance appears on your reports, will all your credit cards be reporting $0? If so, that will certainly cause a score drop. (This will happen even if you have a charge card reporting a positive balance -- charge cards are different from credit cards.)

Anonymous · ‎09-05-2017

The only time paying down balances can result in a score drop is when all balances reported are $0. If you paid off that one account but still had an account with a balance on it, paying down that one account was not the reason that your score dropped.

Anonymous · ‎02-18-2018

Ok so I got alerts saying my balance “decreased” and my score dropped. I see no other factors for drop points. If it was not do to paying down my balance, then why does the alert suggest paying down my cards resulted in dropped poInts.

My utilization is never 30% I remain between 3-9 percentage utilization and maybe 6% overall so why the drop points.

Anonymous · ‎02-19-2018

@AnonymousOk so I got alerts saying my balance “decreased” and my score dropped. I see no other factors for drop points. If it was not do to paying down my balance, then why does the alert suggest paying down my cards resulted in dropped poInts.

My utilization is never 30% I remain between 3-9 percentage utilization and maybe 6% overall so why the drop points.

Great question and definitely a common one. When you receive an alert, it's simply letting you know that something changed on your credit report. Whatever that change is may or may not result in a score change. At the time you receive an alert, you also receive an updated score. it's crucial to realize that the alert you received and the score change often have nothing at all to do with one another. It's very natural to assume that they are tied together, but many times they are not. In your case, I am 100% certain that your balance pay down had nothing to do with your score drop, as your utilization is still a non-zero number in the single-digits.

HeavenOhio · ‎02-19-2018

To give an example, I recently received an alert for a balance increase. Accompanying that alert was a score increase. Balance increases never cause score increases unless you're increasing from all cards being zero. In my case, the score increase was likely due to inquiries becoming unscorable, accounts aging to a year old, or a combination of both. There are times when the reason for a score change isn't so easy to pinpoint, though.

Anonymous · ‎03-10-2018

After months of nothing but score increases and now every alert since Feb 2018 shows a score drop I am beginning to think that something may not be right with the website. My score is dropping for paying down (not off) balances. It concerns me even more that when I called myfico they could not explain it.

Anonymous · ‎03-10-2018

@AnonymousMy score is dropping for paying down (not off) balances.

No it isn't. It may seem or appear that way, but I can assure you that's not the case. FICO scores cannot drop from paying down (but not off) balances. They would either stay the same or go up, depending on if any thresholds are crossed.

Anonymous · ‎03-11-2019

I just received this same Alert from MyFICO. I got a balance DECREASE alert and I also got an alert that my Equifax score had dropped 30 points. My credit card account reported that the balance went from $326 to $303 and it said that my score dropped 30 points because of this $23 balance decrease.

SouthJamaica · ‎03-11-2019

@Anonymous wrote:
I just received this same Alert from MyFICO. I got a balance DECREASE alert and I also got an alert that my Equifax score had dropped 30 points. My credit card account reported that the balance went from $326 to $303 and it said that my score dropped 30 points because of this $23 balance decrease.

It did NOT say "because of", did it?