Sudden Fico Score Drop 57 Points

[Anonymous]

I currently have 3 credit cards. One 13 years old, one 3 years old a new one opened last month. I pay on time and in full and have a large credit limit. My fico score was 778 and dropped to 721 one month after opening my new card. I paid that in full and on time as well.

Can anyone explain this big 57 point drop?

[Anonymous]

A 57 point drop is significant and I wouldn't think would happen outside of the introduction of a minor baddie or something.  Did all 3 of your cards report zero balances to the bureaus where previously at least one reported a balance?  If that's the case, I could see a 20 point drop or so.  With the inquiry, "new account" that just reported and a potential AAoA drop due to the new card I could see maybe another 10-15 points lost... but these two events combined IMO wouldn't hit you for more than 35 points.  The good news is that if you did lose points for either of these things, they'll come back very fast.  All you need to do is let a small $5-$10 balance report on any one of those 3 cards and when it does you'll get back those 20 points or so, and within 6 months or so you should see any points that were lost due to the introduction of the new account come back.

Do you have an open installment loan?  Did you happen to pay off a loan recently?  Any chance of a negative piece of information (like a 30 day late payment) being introduced here?

Also I should ask what the source was of the FICO scores you provided?

[Thomas_Thumb]

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@Anonymous wrote:
I currently have 3 credit cards. One 13 years old, one 3 years old a new one opened last month. I pay on time and in full and have a large credit limit. My fico score was 778 and dropped to 721 one month after opening my new card. I paid that in full and on time as well.

Can anyone explain this big 57 point drop?

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Curious,

Did  all your cards report a balance and did you allow your new card to report a balance that represents a utilization of over 50%?

Thin files with a brand new account are susceptable to large swings for what may otherwise be minor events. All cards reporting balances and "high" utilization on a single card fall in that category.

[Anonymous]

TT, you've seen a new account result in a point drop this big on a thin file in the past?

[Thomas_Thumb]

It is the combination of factors that would be required to potentially result in such a score drop. Thin file with new account + high utilization on new account just reporting. Not saying 57 points is likely because OP has a lengthy credit history. Nonetheless, let's get the details.

I read a couple posts early last year on MyFICO mentioning Fico 8 point drops in the 80 to 100 range. The OPs had thin files with two or three new accounts. In both cases balances were reporting on all cards, Ag UT was rather high - above 50% as I recall? and some individual card UTs were above 70%. Unlike the OP, those profiles had a short credit history. Their young credit history, coupled with high AG UT%, suggests significantly greater volatility in score than what the OP should experience..

Without a detailed accounting from the OP root cause for the score drop can only be hypothesized. Certainly some negative may have slipped in to trigger a score drop of that magnitude. However, thin files with new accounts can behave unexpectedly based on older posts I have read.

I experienced a 44, 45 point drop EQ Fico 04: (809 => 765) one time and (809 => 764) another time with 6 of 6 cards reporting balances vs 2 of 6 or 3 of 6. This happened while maintaining a clean file, keeping AG UT under 6%. Gain all the points back whenever # cards reporting is falls back to 2 or 3. Interestingly, my TU and EX Fico 04 scores didn't drop all that much by comparison and EQ/TU/EX Fico 8 scores all stayed at 850.

Key point for the OP - If no negative has crept in I would expect score to rebound sharply within 90 days of newest account reporting once a payment history is established if UT is below 29% on the card and/or if it is PIF and subsequently reports a zero balance on a later billing cycle.