topic Re: Pissed, Score keeps tanking! in Credit Cards

Pissed, Score keeps tanking!

alpha916 — Fri, 13 May 2011 04:48:16 GMT

Guys, I am serious at a completely loss at what the hell a fico score even means anymore. Today, my score just dropped to 640. At this point I don't even think I could qualify for any loan what so ever.

Look at my score history:

Over the past few months it has done nothing but tank. I have a 7 year history, ZERO late pays, EVER. Not once. And for the past few months I have done nothing but pay down a lot of debt (over 4k, almost 5k now). In fact I paid two cards down to zero and my other two have been paid down a lot. One with 9k and one with 3k.

This is the notification I got today:

I have made a post about this before on the forums and people keep saying "don't worry your score will eventually go up". Well guess what? Its not, it just keeps going down. Is this scoring system some kind of scam or something? I make almost 100k a year and have 12k debt (about 12% debt-to-income). Yet I have the score of someone with bankrupcy on their record. What the hell?

Re: Pissed, Score keeps tanking!

haulingthescoreup — Fri, 13 May 2011 05:04:04 GMT

Ouch!

OK, the happy little things that Scorewatch sends you as "reasons" are meaningless.

What were the negatives on screen two for your earlier score, and what are they now?

Re: Pissed, Score keeps tanking!

alpha916 — Fri, 13 May 2011 05:13:36 GMT

Negatives from wheb my score was 662:

You have too many credit accounts with balances (5 accounts)

You've made heavy use of your available revolving credit. (70%)

You have a short credit history. (7 Years, 6 Months ago)

You opened a new credit account relatively recently. (8 Months ago)

Now my score is 640 and absolutely nothing has changed except for my UTIL is lower (a little under 50%) and my accounts with balances should be 3 (2 credit cards, one mortgage)

Re: Pissed, Score keeps tanking!

haulingthescoreup — Fri, 13 May 2011 05:19:37 GMT

Oh. so you got a score alert, without pulling a new report, right? (Which makes absolute sense.)

OK, I'm scrambling here. How old is the report that you listed the negatives from? (Wow, what an awful sentence...) Is it maybe from back in January?

eta: and you do have one change; you have one fewer open account. How many open accounts do you have now, and of them, how many are revolving and how many installment?

eta part deux: and what was the CL on the now-closed card, and how much did your total CL change?

Re: Pissed, Score keeps tanking!

alpha916 — Fri, 13 May 2011 05:23:27 GMT

@haulingthescoreup wrote:
Oh. so you got a score alert, without pulling a new report, right? (Which makes absolute sense.)

OK, I'm scrambling here. How old is the report that you listed the negatives from? (Wow, what an awful sentence...) Is it maybe from back in January?

eta: and you do have one change; you have one fewer open account. How many open accounts do you have now, and of them, how many are revolving and how many installment?

eta part deux: and what was the CL on the now-closed card, and how much did your total CL change?

Yes, i got a score alert without pull a report.

The report was from March 8th. I have 4 accounts open, 2 with a balance, and 1 mortgage. My credit limit is around 24k (don't know the exact number).

Re: Pissed, Score keeps tanking!

haulingthescoreup — Fri, 13 May 2011 05:52:27 GMT

@alpha916 wrote:

Yes, i got a score alert without pull a report.

The report was from March 8th. I have 4 accounts open, 2 with a balance, and 1 mortgage. My credit limit is around 24k (don't know the exact number).

I'm thinking that this is relevant. Either you had 5 accounts, with 4 being revolving + 1 mortgage, and now you have four, with 3+1, or you had 4, now down to three. I think that by closing the CC, you've significantly reduced your number of open accounts, so you're getting dinged for "too many accounts with balances" and "too many revolving accounts with balances." (I think that the second one is a factor, but I'm not positive.)

That's one of the things that happens when you don't have many open credit accounts: any change on one account can result in a big score swing. That doesn't mean that you should have a bunch of accounts if you're not comfortable with this; it just means that you should be braced for frequent changes.

In other words, if you have (for instance) 11 open accounts, of which 9 are revolving and 2 are installment, and you close one CC, your overall proportions don't change much. But going from 5 open accounts, of which 4 are revolving and 1 installment, down to 4, consisting of 3+1, and two of the three CC's report balances, you might see a big swing. I'm surprised at 20 points, I guess, but I can see it happening.

You might try having only one CC report a balance. Pay off the others right before the statement is due, so that they report $0. If you have 3 open CC's and 1 installment, that will result in 2 of 4 accounts with balances, and 1 of 3 revolving accounts with balances. That might help.

Re: Pissed, Score keeps tanking!

Anonymous — Fri, 13 May 2011 13:26:13 GMT

Here's your problem - that account was paid to $0 and closed. That changed you utilization to 70%. Ideal scoring: all but 1 account reporting $0 balance and the remaining account reporting less than 9%. Utilization is 30% of your score, and I don't know how you're figuring 50%, but this is clearly stating 70%.

Oh, wait, this is old info and you've paid down your utilization? The alert says that you closed an account with $0 balance. Did you update your utilization calculations to include that info? Utilization is ONLY your revolving accounts. Paying one to $0 and closing it would kill your utilization.

@alpha916 wrote:
Negatives from wheb my score was 662:

You have too many credit accounts with balances (5 accounts)

You've made heavy use of your available revolving credit. (70%)

You have a short credit history. (7 Years, 6 Months ago)

You opened a new credit account relatively recently. (8 Months ago)

Now my score is 640 and absolutely nothing has changed except for my UTIL is lower (a little under 50%) and my accounts with balances should be 3 (2 credit cards, one mortgage)

Re: Pissed, Score keeps tanking!

llecs — Fri, 13 May 2011 13:57:52 GMT

@Anonymous wrote:
Oh, wait, this is old info and you've paid down your utilization? The alert says that you closed an account with $0 balance. Did you update your utilization calculations to include that info? Utilization is ONLY your revolving accounts. Paying one to $0 and closing it would kill your utilization.
+1 if that CC reported a CL prior to PIF.

Re: Pissed, Score keeps tanking!

GregB — Fri, 13 May 2011 15:03:30 GMT

Closing that account seems like a big mistake. Seems you will now have to pay another account down to $0 just to get close to where you started. If you had 2 accounts out of 5 revolving accounts reporting a balance and now you have 4 revolving, the only thing that will get you LESS than half the accounts reporting a balance is 1.

Re: Pissed, Score keeps tanking!

Walt_K — Fri, 13 May 2011 15:22:02 GMT

@GregB wrote:
Closing that account seems like a big mistake. Seems you will now have to pay another account down to $0 just to get close to where you started. If you had 2 accounts out of 5 revolving accounts reporting a balance and now you have 4 revolving, the only thing that will get you LESS than half the accounts reporting a balance is 1.

I don't know that it was a big mistake. The amount of accounts reporting balances isn't a huge ding right? OP says 7 year perfect payment history. Seems like the main problem is just utilization. Losing this CL made the utilization jump up higher again. Unclear what exact utilization is, but once that gets under control, the score will improve.

Re: Pissed, Score keeps tanking!

DI — Fri, 13 May 2011 15:40:24 GMT

The problem is you're stuck in a category amongts those who have similar credit profiles that are in the lower score range. Until something drastically improves in your credit profile, you won't move into the category amongst the people who's score is in a higher bracket.

Re: Pissed, Score keeps tanking!

GregB — Fri, 13 May 2011 16:39:37 GMT

@Walt_K wrote:
@GregB wrote:
Closing that account seems like a big mistake. Seems you will now have to pay another account down to $0 just to get close to where you started. If you had 2 accounts out of 5 revolving accounts reporting a balance and now you have 4 revolving, the only thing that will get you LESS than half the accounts reporting a balance is 1.
I don't know that it was a big mistake. The amount of accounts reporting balances isn't a huge ding right? OP says 7 year perfect payment history. Seems like the main problem is just utilization. Losing this CL made the utilization jump up higher again. Unclear what exact utilization is, but once that gets under control, the score will improve.
My util over the last 5-6months is 60-80%. I have had individual balance increases up to $8000 and decreases of similar amounts. An account updated today with a decrease of $4600. EQ FICO per SW has not changed from 701. Last FICO score change was 9/2010, a decrease of 21 points with ONE additional account reporting $115 that gave me 9 accounts with balances out of 18 open revolving accounts.

I do think it is possible that there might not be a big step at 50% accounts with balances if you have a very small number of accounts. Does that happen at 2? Or 3? Who knows?

Re: Pissed, Score keeps tanking!

Anonymous — Mon, 16 May 2011 21:11:41 GMT

For ideal scoring, pay all but one account to $0 and have the other reporting 9% or less.

Dropping that account reduced the overall CL and affected utilization. I suppose you could have also paid off enough on the remaining balances to keep your utilization static or to decrease it, but I find that doubtful. I think it would be really helpful if OP posted the balances / credit limits for the before and after scenarios. Otherwise, this is just a waste of typing, we're just theorizing blindly.

Re: Pissed, Score keeps tanking!

alpha916 — Mon, 23 May 2011 21:37:27 GMT

My score jumped to 675 over the weekend.

Re: Pissed, Score keeps tanking!

Anonymous — Tue, 24 May 2011 01:09:18 GMT

Congrats! What changed?

Re: Pissed, Score keeps tanking!

alpha916 — Wed, 25 May 2011 21:02:20 GMT

@Anonymous wrote:
Congrats! What changed?

Nothing. It just jumped up without any changes to my account.

Re: Pissed, Score keeps tanking!

Anonymous — Mon, 30 May 2011 02:48:25 GMT

Read something about you having closed an account and now a random increase. I'm willing to wager that the score was looking at something with regards to AAoA, where it got past a milestone. That happened to me this year. December 2010 I was in the mid 600s, hit 700 in April when I bought my car. Back down to around 680 or thereabouts but I can deal with that now that I'm no longer fighting the bankruptcy (fell off of Experian, just waiting for it to fall off of the other two bureaus).