topic Re: Credit Limit Increase and Credit Score Drop in Understanding FICO® Scoring

Credit Limit Increase and Credit Score Drop

Anonymous — Sat, 23 Sep 2017 22:17:27 GMT

Hey, a NFCU Visa go up from $13500 to $15500 but my score went down a point? 0 balance on it currently. Does any one know the explanation? My overall credit balance ratio improved so not sure what happened. Thanks!

Re: Credit Limit Increase and Credit Score Drop

Anonymous — Sat, 23 Sep 2017 22:30:04 GMT

The 1 point drop was caused by something else. The only time that a CLI could cause a score drop is in the really odd corner case of a CC limit being raised to some obscenely high level, like 50k or more. When that happens some models drop the card altogether from your total credit limit.

And as a side note, a one point change is just noise anyway. Sort of like a minute difference in a chemistry experiment that is run twice. There could have been tiny bit of grit in the test tube or a million orther things that led to the difference.

Re: Credit Limit Increase and Credit Score Drop

Anonymous — Sun, 24 Sep 2017 03:41:05 GMT

I agree with everything CGID said above. The CLI you got definitely didn't result in your score going down a point. A lot of times things change on your profile that aren't easily seen at the same exact time as a notable event (like your CLI), which can give you the false impresson that it was the notable event that caused the change.

Re: Credit Limit Increase and Credit Score Drop

xenon3030 — Mon, 25 Sep 2017 04:42:31 GMT

I think, the actual credit score numeric value is a real number instead of an integer number. Let's consider a real number of 743.5045 as a credit score. At the time that it would be reported to the customer, it either would be rounded (744) or truncated (743). Therefore, some small changes in the credit profile should result +/-1 variation in the integer credit score. This variation is not noise, miscalculation or error. It is just because an integer number needs to be reported and the slight variation in the real number can be slightly exaggerated.

Therefore, ignore +/-1 variations. If seeing larger variations, look for the possible reasons.

Re: Credit Limit Increase and Credit Score Drop

Anonymous — Tue, 26 Sep 2017 02:38:50 GMT

@xenon3030 wrote:
I think, the actual credit score numeric value is a real number instead of an integer number. Let's consider a real number of 743.5045 as a credit score. At the time that it would be reported to the customer, it either would be rounded (744) or truncated (743). Therefore, some small changes in the credit profile should result +/-1 variation in the integer credit score. This variation is not noise, miscalculation or error. It is just because an integer number needs to be reported and the slight variation in the real number can be slightly exaggerated.

Therefore, ignore +/-1 variations. If seeing larger variations, look for the possible reasons.

What leads you to believe that the above is true?

Re: Credit Limit Increase and Credit Score Drop

xenon3030 — Tue, 26 Sep 2017 23:56:03 GMT

Why do you think that it cannot be true? The credit score numbers should be generated by computer programs and they should not be integer in the calculation steps due to lots of parameters that need to be considered in the calculation steps (only integer in the final report because nobobdy likes a credit score of e.g. 765.4321).

Re: Credit Limit Increase and Credit Score Drop

Anonymous — Wed, 27 Sep 2017 00:16:42 GMT

Hey Xenon. I don't think BBS said your conjecture couldn't be true. He asked why you thought it was true. That's a bit different.

Glad you are here and contributing to the forums.

Re: Credit Limit Increase and Credit Score Drop

Anonymous — Wed, 27 Sep 2017 00:35:11 GMT

@xenon3030 wrote:
Why do you think that it cannot be true? The credit score numbers should be generated by computer programs and they should not be integer in the calculation steps due to lots of parameters that need to be considered in the calculation steps (only integer in the final report because nobobdy likes a credit score of e.g. 765.4321).

I didn't say that it couldn't be true, but I guess my real underlying question is not whether or not it is true, what's the relevance either way?

I mean, if a credit score is going to tick +/- 1 point in whole number values, does it really matter if the actual score is a long decimal that's rounded up or down or not? Either way, what we see is what we see and the end result is going to be the same thing, that is, a score that may fluctuate +/- 1 point with seemingly nothing changing on one's credit profile.

Re: Credit Limit Increase and Credit Score Drop

xenon3030 — Wed, 27 Sep 2017 00:54:21 GMT

I think, I am wrong. I used EX simulator and if I do CLI, it shows -4-5 Fico8 score drop. What is the reason?

Re: Credit Limit Increase and Credit Score Drop

Anonymous — Wed, 27 Sep 2017 01:18:28 GMT

@xenon3030 wrote:
I think, I am wrong. I used EX simulator and if I do CLI, it shows -4-5 Fico8 score drop. What is the reason?

The simulator is wrong. A CLI would not result in a score drop. The only way that would be possible is if two things happened as a result of the CLI. One, the CLI brought the limit of the card to an amount so high that FICO disregarded it from utilization all together. This amount wouldn't be any lower than $50k, but could be higher, say $60k+. Two, if the algorithm did exclude this high credit line, it would have to result in aggregate utilization then crossing a threshold. That being said, if aggregate utilization does cross a threshold, a change of 4-5 points wouldn't be possible; The change would be greater than that. And, if the monster credit limit that received a CLI in this illustration was your only card reporting a balance and it resulted in it being excluded from utilization meaning that all zero balances were reported, the score drop would be more like 15-25 points, so again, a 4-5 point change wouldn't be possible really under any circumstances that I can think of here. The bottom line is that you can't trust simulators.

Re: Credit Limit Increase and Credit Score Drop

xenon3030 — Wed, 27 Sep 2017 02:16:54 GMT

Yes. That simulator should be wrong (highly simplified, giving error). It does not have any senario to increase balance significantly and afterward, apply CLI to see what happens.

CK provides VS. Its simulator includes both CLI and balance increase/decrease but only one senario at a time. For CLI in case of a small balance, it gives +1 increase but not negative. It says:

If you can get a higher credit limit and keep your balances stable, you'd be using a lower percentage of your available credit. That could cause a credit score increase.

VS is very different from Fico8 but the above reason seems to be the only way that a CLI can change Fico8.

Re: Credit Limit Increase and Credit Score Drop

Anonymous — Wed, 27 Sep 2017 03:10:36 GMT

The best simulators are the well versed individuals on this forum. I'm confident that if someone provided their full profile data and asked what would happen if they did X, 5 knowledgeable people from this forum would shoot out predictions based on that data and IMO all 5 predictions would be "better" than what any simulator would provide.

Re: Credit Limit Increase and Credit Score Drop

Thomas_Thumb — Wed, 27 Sep 2017 17:45:47 GMT

@Anonymous wrote:
@xenon3030 wrote:
I think, I am wrong. I used EX simulator and if I do CLI, it shows -4-5 Fico8 score drop. What is the reason?
The simulator is wrong. A CLI would not result in a score drop. The only way that would be possible is if two things happened as a result of the CLI. One, the CLI brought the limit of the card to an amount so high that FICO disregarded it from utilization all together. This amount wouldn't be any lower than $50k, but could be higher, say $60k+. Two, if the algorithm did exclude this high credit line, it would have to result in aggregate utilization then crossing a threshold. That being said, if aggregate utilization does cross a threshold, a change of 4-5 points wouldn't be possible; The change would be greater than that. And, if the monster credit limit that received a CLI in this illustration was your only card reporting a balance and it resulted in it being excluded from utilization meaning that all zero balances were reported, the score drop would be more like 15-25 points, so again, a 4-5 point change wouldn't be possible really under any circumstances that I can think of here. The bottom line is that you can't trust simulators.

If the CLI was card holder requested and the request triggered a HP then a 3 to 8 point score drop would not be unusual. Of course impact could also be zero points depending on before/after HP count and scorecard assignment. Back in 2014 I requested and was granted a CLI on my Best Buy store card. The request triggered a HP on EQ which I was unaware of at the time.

In general I would expect unbuffered Classic Fico 8 scores to naturally fluctuate +/- 5 points. I see swings of that magnitude associated with Fico 8 Auto & Bankcard enhanced scores due to changes in # of cards reporting. I consider the fluctuations natural variation and not nothing to worry about. Not a proponent of micromanaging payments in an attempt to avoid minor score fluctuations.

Cards reporting and revolving utilization have no historical impact. Of course, aggregate utilization should be maintained at a responsible level (say under 29%) to avoid potential adverse action. Small score variations (under 5 points) are hard to pin down - particularly on active files.

Re: Credit Limit Increase and Credit Score Drop

Anonymous — Wed, 27 Sep 2017 18:25:18 GMT

True that an added inquiry could result in a 4-5 point drop, but simulators don't ask whether a CLI is from the result of a SP or HP. The bottom line is that they don't account for nearly enough variables to be at all accurate IMO.

Re: Credit Limit Increase and Credit Score Drop

Anonymous — Fri, 01 Dec 2017 19:51:25 GMT

My credit score dropped 7 points from almost my VS card limit increase going from 300 to 650. I have a 0 balance. I was a little upset.

Re: Credit Limit Increase and Credit Score Drop

Anonymous — Sat, 02 Dec 2017 04:12:57 GMT

@Anonymous wrote:
My credit score dropped 7 points from almost my VS card limit increase going from 300 to 650. I have a 0 balance. I was a little upset.

Your score didn't drop from the credit limit increase. It could have dropped due to going to all cards reporting zero balances when at least one previously was reporting a balance though. Perhaps that played a role here. The CLI would not drop your score though.

Re: Credit Limit Increase and Credit Score Drop

Anonymous — Wed, 14 Feb 2018 17:08:07 GMT

The exact thing happened to me. My VS CC CLI from $700 to $1200 and my score dropped 6 pts. My balance was and still is zero. I'm confused! I'd also paid down other debt going from 28% to 24% utilization and my score dropped another 2 pts.

Re: Credit Limit Increase and Credit Score Drop

CreditBob — Wed, 14 Feb 2018 17:55:13 GMT

Did they pull a credit report and add a hard inquiry to your profile?

Re: Credit Limit Increase and Credit Score Drop

Anonymous — Wed, 14 Feb 2018 18:53:04 GMT

@AnonymousThe exact thing happened to me. My VS CC CLI from $700 to $1200 and my score dropped 6 pts. My balance was and still is zero. I'm confused! I'd also paid down other debt going from 28% to 24% utilization and my score dropped another 2 pts.

Again, it's impossible for a score drop to occur from a CLI. You may be receiving an alert that your credit line was increased and at the time are provided with a new score, but that score change is not related to the CLI. If your score dropped, it was due to something other than the CLI.

Sometimes a hard inquiry can be added from a CLI request, and a HP can cause a score drop. The drop from this scenario though is from the inquiry not the CLI itself. If you check your report and do not see an added HP, your score did not drop from an inquiry either.

Re: Credit Limit Increase and Credit Score Drop

Anonymous — Wed, 14 Feb 2018 19:23:34 GMT

There are no HP. I got 4 alerts today saying. EX- drop -2pts Utilization from 40% to 4% on Cap1. EQ-The balance on your Chase acct decreased by $47 -5pts. EX- Credit limit increase Victoria Secret $700 to $1200 -2pts. EX- Credit limit increase OVERSTOCK $950 to $2450. Two days ago I got an alert from EX saying my score increase 8pts for paying my chase card. No HP and no other obvious reasons for score to decrease with paying down debt and increasing CL. Just seems weird...