topic Re: From 1% to 5% ulitzation cost me 23 points in Understanding FICO® Scoring

From 1% to 5% ulitzation cost me 23 points

kiea — Sun, 06 May 2018 11:20:16 GMT

I don't understand how my score can drop by so many points when my ulitzation is still under 8%. My score went from 647 to 624. I understand my score will drop because my utilization went up but 23 points...wow.

I was so close to having a 670 credit score now I feel like I'm starting all over.

Re: From 1% to 5% ulitzation cost me 23 points

MartyWrite75 — Sun, 06 May 2018 12:15:43 GMT

Don't feel bad. I have a 20 point drop reported today, saying that I have 0% utilization when I have a balance on one card.

I am beginning to learn that the AZEO method doesn't quite work for me. From here on out, I will have a 1% balance on each card. Maybe my points will return. I hope so.

Re: From 1% to 5% ulitzation cost me 23 points

Anonymous — Sun, 06 May 2018 12:19:06 GMT

You didn't post enough of the details. See my signature link on posting help requests regarding utilization.

Re: From 1% to 5% ulitzation cost me 23 points

kiea — Sun, 06 May 2018 12:32:34 GMT

Yes, I think I'm going to keep my ulitzation at 1% too. I thought I will be okay 5% but I guess not.

I'm learning the hard way

Re: From 1% to 5% ulitzation cost me 23 points

SouthJamaica — Sun, 06 May 2018 14:39:36 GMT

@kiea wrote:
I don't understand how my score can drop by so many points when my ulitzation is still under 8%. My score went from 647 to 624. I understand my score will drop because my utilization went up but 23 points...wow.

I was so close to having a 670 credit score now I feel like I'm starting all over.

Despite the conventional wisdom expressed on this site that it doesn't matter what the overall utilization is, so long as it's less than 9%, my experience has been otherwise, and I do see score changes in FICO 8 as my overall revolving utilization goes up and down.

Plus there are other utilization factors that can be at play, such as highest individual utilization, number of cards reporting a balance, percentage of cards reporting a balance, etc.

Re: From 1% to 5% ulitzation cost me 23 points

kuku4koco — Sun, 06 May 2018 18:31:50 GMT

@kiea wrote:
I don't understand how my score can drop by so many points when my ulitzation is still under 8%. My score went from 647 to 624. I understand my score will drop because my utilization went up but 23 points...wow.

I was so close to having a 670 credit score now I feel like I'm starting all over.

When I went over 15% utilization on my Amex last month... I lost 20 points (on EX). When I performed AZEO back in January, effectively bringing my aggregate utilization to under 3% (from 17%)... I gained 9 points total across the board, that's it.

It's different strokes for different folks... it all depends on your profile.

Generally speaking, those points are typically given back after you pay down the utilization. Also, util varies so much from day to day... it generally only matters if you are seeking new credit. (i.e. approval for a loan, etc.)

Re: From 1% to 5% ulitzation cost me 23 points

Anonymous — Sun, 06 May 2018 18:44:07 GMT

@kiea wrote:
Yes, I think I'm going to keep my ulitzation at 1% too. I thought I will be okay 5% but I guess not.

I'm learning the hard way

You're still not learning, actually. Going from 1% to 5% did not lower your score.

Until you actually share what changes occurred on your profile (meaning, list each card's limit and what the balance change was from the last cycle), you may never know what it was.

But there is no way that you can blame your aggregate utilization for this score decrease. That's not what happened, so please do not spread false myths that others might read and believe by mistake.

Re: From 1% to 5% ulitzation cost me 23 points

kiea — Sun, 06 May 2018 19:24:03 GMT

Nothing else changed. I got a new card last month but my score only went down by 2 points. I checked my score on the 1st and it was 647. I checked today after my balance updated and it is 623. So it came from my ulitzation

Re: From 1% to 5% ulitzation cost me 23 points

kiea — Sun, 06 May 2018 19:28:30 GMT

I know it's probably going to take 2 or 3 months to get the points back that is I'm aggravated.

It's frustrating because it takes months to build your score up but 1 thing can bring it right back down.

Re: From 1% to 5% ulitzation cost me 23 points

Anonymous — Sun, 06 May 2018 19:44:58 GMT

@Anonymous wrote:
@kiea wrote:
Yes, I think I'm going to keep my ulitzation at 1% too. I thought I will be okay 5% but I guess not.

I'm learning the hard way
You're still not learning, actually. Going from 1% to 5% did not lower your score.

Until you actually share what changes occurred on your profile (meaning, list each card's limit and what the balance change was from the last cycle), you may never know what it was.

But there is no way that you can blame your aggregate utilization for this score decrease. That's not what happened, so please do not spread false myths that others might read and believe by mistake.

I'm not so sure you are hitting the nail squarely. I have two cards and never more than $100 balance on either one, and never a balance on both at the same time. My CLs are $3,500 and $12,000 so no matter how you slice the bread, my utilization is never above 1% total and 3% on any individual card. Other than the balance coming down on my mortgage each month I never have ANY credit transactions other than those two cards. I have multiple Paid Satis TLs, both credit cards and installment loans and mortgages. As a card gets used the score may go up 20 points and as that balance is paid off it goes down those same 20 points. According to MyFico my FICO8 scores are all between 775 and 785. My experience - pay off a car loan and you lose 40 points. Pay off a Mortgage and expect to lose 60 points. I really see no rhyme or reason behind the swings in my score caused by such a small balance and utilization. Fico seems to love small balances but hates $0.

Re: From 1% to 5% ulitzation cost me 23 points

Anonymous — Sun, 06 May 2018 19:52:51 GMT

One thing which we have done a bad (or nonexistent) job at controlling for here on the forums is the raw dollar amount of CC debt. There's no question that percentage of credit limit (total or individual) is very important. And perhaps it is the only thing that matters.

But perhaps not. Perhaps some FICO models care primarily about percentages but also look secondarily at the actual dollar value as well. If so, then that would begin to explain why someone like my friend SouthJ seems to be able to see a difference between a utilization of 0.1% and 7.8% (say). Because he has a ginormous total credit limit (over 500k) that means going from $500 in CC debt to 40k. If FICO 8 (say) partly looks at the actual dollar value, then it's likely that the model flags 40k of revolving debt as a risk. A person with a much lower total credit limit (10k) would not trigger that.

This wouldn't be too hard to test, if somebody had a handful of cards with high credit limits and then exactly two cards with tiny credit limits. He could switch from having the two tiny CL cards at 48% each (all other cards at zero) to two huge cards at 48%. If the total U stayed at < 8.9% even for the big cards, then in theory there should be no score change. But if there was a score change it would be hard to explain except as FICO looking at the vastly higher dollar value one month vs. the other.

I can certainly imagine that statistically people with 40k of revolving debt are riskier than those with $500, even if the utilization percentage is the same. So I wouldn't be surprised if FICO considered it. I also wouldn't be surprised if FICO doesn't. Either strikes me as a priori quite possible.

Re: From 1% to 5% ulitzation cost me 23 points

Anonymous — Sun, 06 May 2018 23:07:30 GMT

@kiea wrote:
Nothing else changed. I got a new card last month but my score only went down by 2 points. I checked my score on the 1st and it was 647. I checked today after my balance updated and it is 623. So it came from my ulitzation

What about individual utilization?

Re: From 1% to 5% ulitzation cost me 23 points

Thomas_Thumb — Sun, 06 May 2018 23:40:01 GMT

@Anonymous wrote:
@kiea wrote:
Nothing else changed. I got a new card last month but my score only went down by 2 points. I checked my score on the 1st and it was 647. I checked today after my balance updated and it is 623. So it came from my ulitzation
What about individual utilization?

So ... You got a new card and minimal change in score. That's not unexpected. Now the new card reports its first balance and score drops significantly - is that correct? If so, this behavior has been reported before - primarily for thin files that are somewhat new to revolving credit. Regardless of file thickness, new accounts 1st reporting balances can drop score even at low utilization levels. The newness influence will dissipate within 90 days - IMO.

See the below forobtaining new credit. Although it is in reference to VantageScore, Fico may treat new credit cards 1st reporting balances as a score ding for a cycle or two.

The below "time since most recent account opening is too short" specifies Fico 98/Fico 04 but I believe it carries over to Fico 8

Also see below for Fico reason codes from Experian. Note the "especially for people with short credit histories" associated with accounts recently opened. If file is thin and young, one account might be considered too many.

Re: From 1% to 5% ulitzation cost me 23 points

Anonymous — Mon, 07 May 2018 03:47:52 GMT

OP, prior to opening this most recent credit card, when was the last time you opened an account before that?

If your previous opened account was > 1 year ago, it means your AoYA dropped from > 1 year to 0, which commonly results in a 15-20 point FICO score drop.

TT, this fact above is something that the graphic you posted above doesn't really take into consideration. Someone who last opened an account 2 months ago that opens a new one today verses someone that hasn't opened one in over a year that opens one today are going to see different impacts on their score, all other things being equal of course. I think it's impossible to suggest as a blanket statement that adverse impact from a new account can be overcome in 3 months. IMO, the ability to recover from new accounts is very profile-specific.

Re: From 1% to 5% ulitzation cost me 23 points

Thomas_Thumb — Mon, 07 May 2018 02:11:54 GMT

BBS - Please delete the multiple quotes in your above post!

Regarding the 90 day new account penalty, I think one likely exists with Fico and yes that particular deduct likely drops off in 90 days. That factor is independent from AOYA factor - IMO and I recall mentioning that it primarily affects young/thin files.

AoYA clearly influences score until one year age is reached - I have stated as much many times. However, I can see how my wording in the my prior post can be misconstrued

Re: From 1% to 5% ulitzation cost me 23 points

Anonymous — Mon, 07 May 2018 04:02:06 GMT

Yikes, good call on the edit of my previous post; not sure how that happened!

Regarding the 90 day new account penalty that you spoke of, how would you quantify it? I wouldn't think that it's significant under most circumstances. It never was on my profile, anyway, both when it was dirty and when it was clean. You mentioned how it's independent from AoYA. If that's the case and AoYA dropping under 1 year results in a 15-20 point loss on most profiles, a 90 day new account penalty on top of that would mean a score loss of > 15-20 points (on most profiles) wouldn't it? I can only quantify anything at 90 days on my profile to result in a 1-5 point impact when clean and a 2-4 point impact when dirty in looking at my 90 day point following the opening of new accounts in 2016 and 2017. I guess my point here, again based on my profile, is that 90 days being some sort of threshold here is quite insignificant relative to the impact of crossing the AoYA 1 year threshold.

Re: From 1% to 5% ulitzation cost me 23 points

kiea — Mon, 07 May 2018 10:31:00 GMT

Oh okay. I opened 2 cards in December 2017 so that makes sense. I'm not going to opened no more until my cards age a little. I didn't even think of the AoYA.

Re: From 1% to 5% ulitzation cost me 23 points

Anonymous — Mon, 07 May 2018 11:16:09 GMT

@kieaOh okay. I opened 2 cards in December 2017 so that makes sense. I'm not going to opened no more until my cards age a little. I didn't even think of the AoYA.

That's sort of the double edged sword here. With your AoYA at say 6 months now, if you don't open any new accounts until the ones you have age a little more, say your AoYA goes past 1 year. Then opening them will cause a greater score drop (when AoYA goes from > 1 year to 0). If you open them now you'd see less of a score drop, but you'd incur whatever that drop is sooner. Ultimately when the smoke clears (long term) it doesn't really matter, but in the short term you can see the plus and minus of opening new account(s).

Re: From 1% to 5% ulitzation cost me 23 points

Thomas_Thumb — Mon, 07 May 2018 16:09:19 GMT

@Anonymous wrote:
Yikes, good call on the edit of my previous post; not sure how that happened!

Regarding the 90 day new account penalty that you spoke of, how would you quantify it? I wouldn't think that it's significant under most circumstances. It never was on my profile, anyway, both when it was dirty and when it was clean. You mentioned how it's independent from AoYA. If that's the case and AoYA dropping under 1 year results in a 15-20 point loss on most profiles, a 90 day new account penalty on top of that would mean a score loss of > 15-20 points (on most profiles) wouldn't it? I can only quantify anything at 90 days on my profile to result in a 1-5 point impact when clean and a 2-4 point impact when dirty in looking at my 90 day point following the opening of new accounts in 2016 and 2017. I guess my point here, again based on my profile, is that 90 days being some sort of threshold here is quite insignificant relative to the impact of crossing the AoYA 1 year threshold.

BBS, The 90 days is highly significant on a C8 scorecard (thin/young), perhaps more so than the change at AoYA crossing 12 months. Of course this is not something you or I can test. The impact has been communicated by those with young files - with greatest impact coming from young/thin and opening more than 1 account "at the same time".

I'm working my way toward thin but, will never be young again

Re: From 1% to 5% ulitzation cost me 23 points

Anonymous — Tue, 08 May 2018 00:48:04 GMT

Interesting regarding thin/young files and the impact at 90 days. Like you said, definitely not something we can test. I'd like to hear it quantified, though, by someone with a thin/young file that crossed the 90 day mark on their youngest account.