Understanding FICO® Scoring

[dakbear]

I have been paying off my credit cards over the last few months. I was down to 2 cards. The bill came for one and the balance was $306.82. At the time my Experian score was 645. I got together the $306.82 to pay that card off which would leave me with only 1 more credit card to pay off. Two weeks later I got an alert from my Fico that my score had dropped to 635 due to an account that had been idle for 10 months and had a balance INCREASE of $306.82. This was the same account that I had paid OFF! How do they come up with it as new activity on an idle account when I have been paying on it the last 10 months? Also how could My Fico show it as having a balance INCREASE of $306.82? I thought I understood how the scoring worked.....you pay down your balances over time and your score goes UP. I payed off a balance and my score dropped by 10 points! How long will it take for this error to be corrected or do I need to contact Experian to investgate this error? I would like to buy a home so paying off my debt and rasing my score will help me greatly when qualifying for a mortgage. But how can that happen when paying $306.82 of my debt actually dropped my score by 10 points?

[jlloyd]

In my past experience, if you wait for your credit card company to fix the error, you will be waiting for a long time.  My first step would be to call Experian to launch an investigation.

[deb]

It is to the credit bureau's advantage to keep your score as low as they can, because they get paid by that. I sometimes think they deliberately drag their feet in order to keep scores lower as long as possible. Review your credit report, dispute errors in writing, and follow up.

[frogfrog22]

OK, there are a lot of opinions about credit.  I own a mortgage company and a credit restoration company.  Do not close old accounts 30% of your score is length of credit history.  If you think you have too much available credit close the most recent accounts.  Also never, never pay your account to 0,  always leave a small balance (@ $25), if you do you'll see a reduction in score, just like you did.  You need to keep your balances below 40% and above 0% of available credit for maximum score.  Also you score is good enough to qualify you for the "community lending" programs i.e. my community 100, home possible 100, FHA, VA etc.

Good luck. 

[Raine]

Hi h1075,

Thanks for your post, however, its content violates our User Guidelines regarding credit repair and it is therefore being deleted.

Our User Guidelines say:

Credit Repair

FICO Forums is intended to provide helpful and useful tips for managing credit and understanding FICO scoring. This is not the place to exchange credit repair advice that encourages consumers to provide untrue or misleading information to a credit bureau or lender for the purpose of raising FICO scores or otherwise improving credit ratings, credit histories or credit records. Such material may be edited or removed, and egregious or repeat offenders will be banned from future participation in FICO Forums.

[dakbear]

I still have one open account. According to My Fico you should keep you balances below 40%. So with one card still having a balance my balance to available credit is at 20%. The problem is it is being incorrectly shown as me having a balance when it is $0 and that this "new" balance is on an acoount that had been dormant for 10 months, which is not true since for the past 10 months I have not charged anything on it only been making monthly payments.