So the top item affecting my score was something about heavy usage of my available revolving credit. I have $78,000 in credit lines and I had $17,800 spread across them. Some were new cards with 0% interest for 18 months, and rest were 0% for several more years on furniture purchases.
Since I'm trying to buy a house, I reviewed the items affecting my score from all 3 credit bureaus, then ran the score simulator on FICO's website. The following is what was displayed in the simulator in regards to the option of paying down credit card debt:
How you manage your revolving accounts (credit cards, department store credit cards, revolving lines of credit) is heavily weighted in the FICO® Score. FICO Scores evaluate your revolving accounts in a variety of ways, including comparing your balance to your available credit, as well as looking at the number of accounts with a balance. A general rule to remember: consistently carrying lower balances on revolving accounts will generate positive points for a score.
This simulation shows what could happen to your FICO Score if you pay down 6,334 of your overall credit card balance over a period of one month. The simulation took into account both your lower balances and the aging of your credit history. In general, a score will increase as credit history lengthens and consistent behavior paying down your credit card balances is demonstrated.
(Note, even if you pay your credit cards in full each month, the balance shown on your credit report may not be $0. Instead, it will reflect your account balance as reported by the lender to the credit bureau, which is typically the balance on your latest monthly statement.)
ABOUT THE FICO® SCORE SIMULATOR
The simulator and simulated score are provided for informational purposes only and is intended to approximate the impact of various scenarios on your FICO® Score – assuming all other factors stay the same. Using this tool, you can get a better understanding of how various positive and negative actions you can take could affect your FICO Score.
Your actual score, and the impact of any action taken, results from a complex interaction of FICO's scoring methodologies and the information on your credit report, some of which changes daily. Also, please note the results of simulating different scenarios are not necessarily cumulative. In other words, simulating two different scenarios, each of which individually could raise your FICO Score by 20 points, will probably not collectively raise your FICO Score by 40 points. Information on your authorized user accounts are not considered in the FICO Score simulations.
When I ran the simulator, it said that my Trans Union score would go from 727 to 747. Although I didn't expect an exact 20 point increase since FICO would never tell exactly how much the improvement would be, I did expect a good 10 - 15 point gain. I think it's reasonable to expect half of what the simulator had indicated.
So, I paid down $6,334 in one month, exactly as I had indicated in the simulator. And what do you know, my score went up 6 points. Six points. Not sixteen, or sixty, but SIX!
What a load of crap. That simulator is a joke and doesn't provide anywhere NEAR the results as what actually happens. Sure glad I used that as a resource to base my decision on to pay off over $13,000, to get to a goal score of 762.
Looks like I should be happy if I don't LOSE 35 points after paying off all but 4.9% of my debt.
FICO sucks.
