topic Re: Credit score decrease in Understanding FICO® Scoring

Credit score decrease

Anonymous — Mon, 08 Jul 2019 16:48:03 GMT

I'm trying to understand why my Experian score drop 10 points with $57 CC increase. My CU is at 22%. That's a huge point decrease for a small increase amount and low CU. I have since paid down that $57.

Re: Credit score decrease

calyx — Mon, 08 Jul 2019 16:49:50 GMT

@Anonymous wrote:
I'm trying to understand why my Experian score drop 10 points with $57 CC increase. My CU is at 22%. That's a huge point decrease for a small increase amount and low CU. I have since paid down that $57.

8.9% is typically considered ideal - was your CC under 9% before the increase?

Re: Credit score decrease

Anonymous — Mon, 08 Jul 2019 17:03:47 GMT

No it’s been maintained at a utilization of 22%. Now I’m confused because I thought CU was supposed to be good if it’s kept at 30% or under. When I have paid off my CC in the past my fico score decreases. So I’ve kept it at 22%.

Re: Credit score decrease

Anonymous — Mon, 08 Jul 2019 17:50:25 GMT

8.9% is optimal scoring

if you have no other balances and pay it to $0 then yes, you lose points for not using credit.

30% is just the advice websites recommend because they don't know better.

Re: Credit score decrease

Anonymous — Mon, 08 Jul 2019 17:54:49 GMT

Thanks so much for the correct info!

Re: Credit score decrease

Anonymous — Mon, 08 Jul 2019 18:10:22 GMT

Clarification:

8.9% is the threshold for aggregate utilization. For individual cards it is advised to keep balances at 28.9% or lower (not 30%).

OP, how many credit cards do you currently have, and how many are reporting balances? Also, what are the credit limit(s) for your card(s)?

Re: Credit score decrease

SouthJamaica — Mon, 08 Jul 2019 18:07:46 GMT

@Anonymous wrote:
I'm trying to understand why my Experian score drop 10 points with $57 CC increase. My CU is at 22%. That's a huge point decrease for a small increase amount and low CU. I have since paid down that $57.

We would need to know what your limits and balances are to advise you. I couldn't really understand the facts from your description.

There is almost no scenario under which a $57 increase in utilization, taking you to an aggregate of 22% utilization, would cause a score decrease.

Re: Credit score decrease

Anonymous — Mon, 08 Jul 2019 18:11:40 GMT

@Anonymous wrote:
Clarification:
8.9% is the threshold for aggregate utilization. For individual cards it is advised to keep balances at 28.9% or lower (not 30%).

I prefer to ignore the aggregate option... It's much easier to keep all cards under 8.9% instead of floating higher balances on particular cards and then having to calculate 2 different sets of numbers.

If I did want to float something for a couple of months just figuring out the amount vs balance Showing restraint on spending towards the limit gets rewarded with CLI's when you ask for them. Your scores more likely to be consistent if a lender pulls the rug out from under you for some reason and you don't have a spike in UTIL because you lost a TL.

When I app'd for Uber I got instapproved and gave them a call a couple of mins later to bump it to 25K and the CA on the phone mentioned my spending patterns and approved it on the spot for 2.5X what the computer approved for.

Re: Credit score decrease

Anonymous — Mon, 08 Jul 2019 18:40:17 GMT

@Anonymous wrote:
@Anonymous wrote:
Clarification:
8.9% is the threshold for aggregate utilization. For individual cards it is advised to keep balances at 28.9% or lower (not 30%).

I prefer to ignore the aggregate option... It's much easier to keep all cards under 8.9% instead of floating higher balances on particular cards and then having to calculate 2 different sets of numbers.

If I did want to float something for a couple of months just figuring out the amount vs balance Showing restraint on spending towards the limit gets rewarded with CLI's when you ask for them. Your scores more likely to be consistent if a lender pulls the rug out from under you for some reason and you don't have a spike in UTIL because you lost a TL.

When I app'd for Uber I got instapproved and gave them a call a couple of mins later to bump it to 25K and the CA on the phone mentioned my spending patterns and approved it on the spot for 2.5X what the computer approved for.

In an ideal world I'd agree with just keeping each card under 8.9% utilization but that's not always possible unless you have very high limits on all your cards, and the ability to pay in full at all times. And sometimes it just makes financial/strategic sense to exceed 8.9% on an individual card. For example, in January I opened a Platinum Visa card with Navy Federal. Since it is a $0 transfer fee, 0% APR card I consolidated all my other balances to that one card and I've used it as my AZEO card since; all my other cards report $0 balances each month.

The balance transfers caused the card's utilization to initially spike to 78% but its now paid down to 25%. While the individual utilization on that card was less than ideal at first, my aggregate utilization never exceeded 4% so my scores are optimized for FICO purposes as I stayed well below the 8.9% aggregate utilization threshold. That's the only card I carry a balance on, and since it doesn't cost me anything I can pay it down at my own pace until the BT offer expires, while investing the funds that could pay it off elsewhere (A checking account with a local CU that pays 7.5% APR is one such repository).

Re: Credit score decrease

Anonymous — Mon, 08 Jul 2019 18:56:42 GMT

There's always an exception to the rule since life doesn't care about your FICO.

7.5% APY.... up to what amount? Usually they have a cap of like $1K on those teaser rates. I have a checking account that pays 2.5% up to 50K though that comes in useful for covering the electric bill every month.

Re: Credit score decrease

Anonymous — Mon, 08 Jul 2019 19:04:24 GMT

I have 2 CC which both report balances. 1. CC balance $136.43 CL $1250. 2. CC balance $1331.93 CL $6000. I also just recently had a credit limit increase on the second CC (not requested they automatically increased it).

Re: Credit score decrease

Anonymous — Mon, 08 Jul 2019 19:10:58 GMT

@Anonymous wrote:
I have 2 CC which both report balances. 1. CC balance $136.43 CL $1250. 2. CC balance $1331.93 CL $6000. I also just recently had a credit limit increase on the second CC (not requested they automatically increased it).

Those are always nice presents when you're not expecting them. Ddid that factor into the new reports or not? Depending on the banks you could potentially ask for a CLI and not take a HP for them.

Re: Credit score decrease

Anonymous — Mon, 08 Jul 2019 19:16:25 GMT

Yes it did. They are both Capital One CC.

Re: Credit score decrease

Anonymous — Mon, 08 Jul 2019 19:16:54 GMT

@Anonymous wrote:
There's always an exception to the rule since life doesn't care about your FICO.

7.5% APY.... up to what amount? Usually they have a cap of like $1K on those teaser rates. I have a checking account that pays 2.5% up to 50K though that comes in useful for covering the electric bill every month.

Yeah, it caps out at a relatively small amount; either $1K or $2K. I also have BCU checking that pays 3% APY on balances up to $15K.

Re: Credit score decrease

Anonymous — Mon, 08 Jul 2019 19:29:06 GMT

@Anonymous wrote:
Yes it did. They are both Capital One CC.

I would go ahead and ask for a CLI on both of them then since they're in the giving mood it might be approved and help get the UTIL % down w/o having to hand them cash for the balances right now. Of course the point benefit won't populate until they report next month.

Re: Credit score decrease

Anonymous — Mon, 08 Jul 2019 19:33:00 GMT

@Anonymous wrote:
Yeah, it caps out at a relatively small amount; either $1K or $2K. I also have BCU checking that pays 3% APY on balances up to $15K.

3% is good for checking if you don't hide a lot of cash in checking monthly. 15K is a good level... most of the high APY accounts cap out at 20-25K... The teaser accounts stick relatively low though... Consumers CU in IL though has an interesting tiered APY scheme that involves using their CC to hit somewhere around 5% up to 10K

Re: Credit score decrease

Anonymous — Mon, 08 Jul 2019 19:43:52 GMT

@Anonymous wrote:
I have 2 CC which both report balances. 1. CC balance $136.43 CL $1250. 2. CC balance $1331.93 CL $6000. I also just recently had a credit limit increase on the second CC (not requested they automatically increased it).

What was the credit limit on the second card before the CLI to $6,000?

FICO scoring penalizes you if all your credit cards are reporting balances to the credit bureaus. For some, the penalty occurs when more than one-third of your cards report a balance, and for other the penalty begins when more than half of your cards report a balance. In your case 100% of your cards are reporting balances so that could be one possible reason for the decrease in score.

Re: Credit score decrease

Anonymous — Mon, 08 Jul 2019 20:03:12 GMT

The CL prior to increase was $3000. I will be paying off the $136 balance of one CC this week. I will have the other CC paid off by next month. I do know the credit increase dropped my score as well. I’m just trying to find the balance of how to increase my scores. I don’t have any late payments for the past 3.5 years. Due to a recent total loss, my former car was paid off (which also decreased my score) and I had to take out a loan for another car and payments have been on time. It just seems like my credit scores just keeps dropping. So frustrating. But thank you all for your help.

Re: Credit score decrease

Anonymous — Mon, 08 Jul 2019 20:09:52 GMT

It's frustrating when you're stuck in the rutt of roller coaster scores within a small band. Time is the worst part of the whole thing... it takes a lot of it to add up to points on your scores. Once you have cards over a decade old it's hard to shake an 800+ score though. Of course a late or BK could knock you to your knees but, as long as you're making payments on time you're safe.

Just hang in there and since both cards are Cap1 it's time to expand your portfolio to diversify you against single lender exposure. I would check the pre-qual sites and see what's coming up on their radar for you and maybe we can find something that matches your spend and desires.

https://doctorofcredit.com/view-personalized-credit-card-offers/

Re: Credit score decrease

Anonymous — Mon, 08 Jul 2019 20:22:57 GMT

Yeah that late payments 3.5 years ago took a toll on my scores. Thanks for the great advise! I’m definitely going to do that.