topic Re: Credit Score Drop in Understanding FICO® Scoring

Credit Score Drop

Anonymous — Sun, 13 Dec 2020 03:57:53 GMT

I am trying to wrap my head around a recent drop in my Trans Union credit score. Capital One just recently gave me an unrequested $3000 credit line increase (so they wouldn't have done a hard pull on me) on one of my credit cards. When my score updated with that information, my FICO 8 score dropped 13 points (751 to 738) and my Vantagescore 3.0 dropped 42 points (755 to 713) from the day before. There were no other changes on my credit report. The credit increase dropped my credit utilization on that card from 37% to 17%. And my overall credit utilization from 49% to 24%. There was no change to my Experian score. I had noticed when I ran it through the score simulation it showed the drop, but I had figured it must have been some glitch. Does anyone have a clue why my score would have dropped like that when my utilization has gone done and available credit gone up? Thanks for any insight because it is blowing my mind.

Re: Credit Score Drop

Slabenstein — Sun, 13 Dec 2020 04:06:33 GMT

The CLI and FICO score decrease are unrelated. We would need more information about your profile to help you zero in on the cause of the change. Also, what are the respective dates for your 751 and 738 TU FICOs and from what source do you get them?

Re: Credit Score Drop

Anonymous — Sun, 13 Dec 2020 04:21:23 GMT

@Anonymous wrote:
When my score updated with that information, my FICO 8 score dropped 13 points (751 to 738) and my Vantagescore 3.0 dropped 42 points (755 to 713) from the day before. There were no other changes on my credit report. The credit increase dropped my credit utilization on that card from 37% to 17%. And my overall credit utilization from 49% to 24%.

Nothing that you mentioned there was the cause of your score drop. Also be aware that your score didn't "update with that information." You received an "alert" that something changed on your credit report, probably the new CLI. At that time you are provided with a new credit score. The change that you see in the score has nothing to do with your alert reason in this case. I understand that it's very misleading, but a CLI (especially when it results in a significant utilization drop) isn't going to decrease a Fico score. Something else on your report changed and the only way to identify it would be to compare you before/after reports line by line.

Re: Credit Score Drop

Anonymous — Sun, 13 Dec 2020 05:43:28 GMT

I did go through everything and compare. My myFICO scores updated on 12/11 with my newest scores. On 12/12 I got the alerts for the CLI for TransUnion and Experian and the 13 point score drop for TransUnion and no change in score for Experian. I pulled my reports from AnnualCreditReport.com and the only changes from the last time I checked it, about a month ago, are the CLI increase and owed balance decreases. There is no negative reported information, no hard inquiries or anything that I could think of that would cause it to drop.

The only thing I can think of is that with higher available balance means there is a higher risk of default, but that would be penalizing me for paying my bills on time, paying my balances down, and being fiscally responsible.

As for the Vantagescores, they came from CreditKarma and WalletHub.

Re: Credit Score Drop

Slabenstein — Sun, 13 Dec 2020 06:01:41 GMT

@Anonymous wrote:
I did go through everything and compare. My myFICO scores updated on 12/11 with my newest scores. On 12/12 I got the alerts for the CLI for TransUnion and Experian and the 13 point score drop for TransUnion and no change in score for Experian. I pulled my reports from AnnualCreditReport.com and the only changes from the last time I checked it, about a month ago, are the CLI increase and owed balance decreases. There is no negative reported information, no hard inquiries or anything that I could think of that would cause it to drop.
The only thing I can think of is that with higher available balance means there is a higher risk of default, but that would be penalizing me for paying my bills on time, paying my balances down, and being fiscally responsible.

As for the Vantagescores, they came from CreditKarma and WalletHub.

Hm. One source that's often at the bottom of apparently random score changes is account aging, but if the TU 751 was generated by a score pull on the 11th and the 713 was generated to accompany an alert on the 12th, that wouldn't be the case here. It's also interesting that it occurred only on TU. Two possibilities that occur to me there are a delayed posting of a balance that was already updated on EX (though you say you have been paying your balances down) or a closed account falling off of TU early and taking you across a minor AAoA threshold. But that's just me shooting into the dark. If you want to post the details of your TU and EX reports from the 12th and from a month ago, we can give them another look and see if there's anything you've missed. As stated above, an increase to revolving TCL will not cause a decrease in score on FICO8. It can cause a score increase if it decreases agg util w/o a new inquiry or account, but not a decrease.

As far as the score drop on VS3 goes, that model seems to have wide score swings triggered by minor profile changes. It isn't used by most lenders, so I wouldn't worry about it.

Re: Credit Score Drop

SouthJamaica — Sun, 13 Dec 2020 06:52:33 GMT

@Anonymous wrote:
I did go through everything and compare. My myFICO scores updated on 12/11 with my newest scores. On 12/12 I got the alerts for the CLI for TransUnion and Experian and the 13 point score drop for TransUnion and no change in score for Experian. I pulled my reports from AnnualCreditReport.com and the only changes from the last time I checked it, about a month ago, are the CLI increase and owed balance decreases. There is no negative reported information, no hard inquiries or anything that I could think of that would cause it to drop.
The only thing I can think of is that with higher available balance means there is a higher risk of default, but that would be penalizing me for paying my bills on time, paying my balances down, and being fiscally responsible.

As for the Vantagescores, they came from CreditKarma and WalletHub.

The Vantage scores are meaningless.

As to your FICO score, there is no way a limit increase caused a score drop. You're just missing something.

Re: Credit Score Drop

Anonymous — Sun, 13 Dec 2020 14:58:44 GMT

@Anonymous wrote:

The only thing I can think of is that with higher available balance means there is a higher risk of default, but that would be penalizing me for paying my bills on time, paying my balances down, and being fiscally responsible.

SJ is right in his last post, as are the others that are telling you that your CLI did not lower your Fico scores. What you stated above is not the case. The only rare case of a CLI adversely impacting score would be if the limit on the card crossed a [very high] threshold for that algorithm where it was then "ignored" from the equation. Such a threshold could be (say) $60k. So, if you had a $55k limit on a card and it was your AZEO card and you received a CLI to $65k, crossing the threshold, the algorithm could ignore that account and your score could drop maybe 20 points because it would consider you to be at AZ. I'm quite sure this isn't the case with the CLI of the OP, though.

Re: Credit Score Drop

Anonymous — Sun, 13 Dec 2020 16:43:21 GMT

I'm not sure how accurate myFICO's score simulator is, but it shows on my Experian, if I were to get any kinds of further CLI, between $1 and $7050, that my score would drop up 10 points. Then, if I got to an additional $14,000 it would start going up again. On the other side, TransUnion stays the same and starts increasing if I were to get another $1200. These simulated scores take nothing else into consideration except a CLI, so I do t know why it would show a decrease there either

Re: Credit Score Drop

Slabenstein — Sun, 13 Dec 2020 16:55:42 GMT

@Anonymous wrote:
I'm not sure how accurate myFICO's score simulator is, but it shows on my Experian, if I were to get any kinds of further CLI, between $1 and $7050, that my score would drop up 10 points. Then, if I got to an additional $14,000 it would start going up again. On the other side, TransUnion stays the same and starts increasing if I were to get another $1200. These simulated scores take nothing else into consideration except a CLI, so I do t know why it would show a decrease there either

Score simulators are generally not accurate. If a simulator is predicting a score decrease as a result of a CLI, it is an example of that.

Re: Credit Score Drop

thornback — Sun, 13 Dec 2020 17:25:04 GMT

@Anonymous wrote:
These simulated scores take nothing else into consideration except a CLI, so I do t know why it would show a decrease there either

Simulators assume an HP will occur with a CLI request, so they will estimate the cost of the HP and the offset given the potential point gain, if any, from decreased util. That would be why the simulator produced differing results dependent upon the proposed amount of the CLI.

That said, if you incurred no HP then, as others have explained, no portion of your point loss was due to the CLI.

Re: Credit Score Drop

Anonymous — Sun, 13 Dec 2020 22:10:33 GMT

@Anonymous wrote:
I'm not sure how accurate myFICO's score simulator is, but it shows on my Experian, if I were to get any kinds of further CLI, between $1 and $7050, that my score would drop up 10 points.

Not accurate, as simulators are garbage. The top knowledge members of this forum can make any simulator go cry in the corner.

Re: Credit Score Drop

Anonymous — Wed, 23 Jun 2021 12:49:38 GMT

I'd like to bump this to the top.

I've recently had a similar issue to the OPs whereas my score dropped from a large CLI. I've searched the forums and have found countless other people experiencing the same issue. Most responses have been that CLI do not cause a score to drop but that seems to be incorrect.

This increase was significant so my utilization dropped quite a bit. I have NO another negative reporting so they is NO other reason why my score would decrease.

Does anyone have some other idea of what might cause a score to decrease from a CLI?

Re: Credit Score Drop

Horseshoez — Wed, 23 Jun 2021 13:50:32 GMT

@Anonymous wrote:
I'd like to bump this to the top.

I've recently had a similar issue to the OPs whereas my score dropped from a large CLI. I've searched the forums and have found countless other people experiencing the same issue. Most responses have been that CLI do not cause a score to drop but that seems to be incorrect.

This increase was significant so my utilization dropped quite a bit. I have NO another negative reporting so they is NO other reason why my score would decrease.

Does anyone have some other idea of what might cause a score to decrease from a CLI?

What does the rest of your credit profile look like?

Re: Credit Score Drop

Anonymous — Wed, 23 Jun 2021 16:07:08 GMT

i have 7 credit cards all paid on time except for 1 late payment, 2 inquiries, and a BK from 2014. My overall credit utilization is at 59% which I've been bringing down consistently every month. I've gone over my credit report from trans union and nothing negative has been reported.

Re: Credit Score Drop

SouthJamaica — Wed, 23 Jun 2021 20:11:56 GMT

@Anonymous wrote:
i have 7 credit cards all paid on time except for 1 late payment, 2 inquiries, and a BK from 2014. My overall credit utilization is at 59% which I've been bringing down consistently every month. I've gone over my credit report from trans union and nothing negative has been reported.

The CLI did not cause a decrease in your scores.

You really need to look elsewhere.

Re: Credit Score Drop

Anonymous — Wed, 23 Jun 2021 20:16:31 GMT

You're wrong and It did. And there have been countless others throughout not only these forums but others who have experienced the same issue. There's not a whole lot going on with my credit report as of recently so if there was something else, I'd be able to spot it.

Re: Credit Score Drop

Horseshoez — Wed, 23 Jun 2021 20:32:12 GMT

@Anonymous wrote:
You're wrong and It did. And there have been countless others throughout not only these forums but others who have experienced the same issue. There's not a whole lot going on with my credit report as of recently so if there was something else, I'd be able to spot it.

Sorry, this is a debate which I do not believe you will prevail in. Why? There is just too much empirical data to back up what @SouthJamaica wrote for him (or her, don't actually know) to be "wrong".

Re: Credit Score Drop

FinStar — Thu, 24 Jun 2021 04:04:19 GMT

Before anyone starts clutching their pearls, let's keep things Friendly, Supportive and Respectful. I would hate to lock this thread if things spiral in the wrong direction. There certainly can be disagreements, but all posts must conform to the myFICO Forums Etiquette Guidelines. Thank you for your understanding.

Re: Credit Score Drop

USMC_Winger — Thu, 24 Jun 2021 07:10:35 GMT

@Anonymous wrote:
I'd like to bump this to the top.

I've recently had a similar issue to the OPs whereas my score dropped from a large CLI. I've searched the forums and have found countless other people experiencing the same issue. Most responses have been that CLI do not cause a score to drop but that seems to be incorrect.

This increase was significant so my utilization dropped quite a bit. I have NO another negative reporting so they is NO other reason why my score would decrease.

Does anyone have some other idea of what might cause a score to decrease from a CLI?

@Anonymous: Yes. This can happen to FICO mortgage scores when one is using the AZEO method to optimize FICO scores, and the target CC gets a CLI above a certain threshold. (FICO scores can also drop when the target CC for the AZEO method accidentally gets coded as a charge card when it's reported to the CBs, but that mistake has nothing to do with a CLI.)

Specifically, if every CC reports a $0 balance except one CC, which reports a small balance (like under $100), and that CC with a balance gets a CLI, say from $34,000 to $36,000 (any amount above $35,000, really), then as soon as that new CL is reported on the TU CR, the TU FICO 4 (mortgage) score will decrease about 10 to 20 points due to the "All Zero" (AZ) penalty. This is because the FICO scoring calculations remove that $36,000 CL tradeline from the balances and utilization ratios involving revolvers and open-ended accounts. Therefore, all CCs that now count as revolvers have a $0 balance, resulting in the AZ penalty, which drops the TU FICO 4 score.

The exact same thing happens to the EQ FICO 5 (mortgage) score, which has the same $35,000 CL threshold. In the above scenario, you would see both the TU FICO 4 and EQ FICO 5 scores drop points at the same time as the new $36,000 CL is reported. The EX FICO 2 (mortgage) score has a $31,000 threshold, so you wouldn't expect to see it drop, too, unless the CL on that CC jumped all 3 CB thresholds, say from $30,000 to $36,000.

You didn't mention which TU FICO score dropped, but a 59% aggregate utilization across all revolving and open-ended accounts when one revolving account's CL is above $35,000 exceeds the criteria for the AZEO method, so this situation doesn't apply to your case, including with FICO 8 and 9 scores.

I think you need to look at what else is going on in your credit file besides the CLI to account for the score drop. Did this TU FICO score drop on the first of the month? FICO 8 and 9 scores often drop when the oldest credit account reaches 3 years old. (Doesn't happen to everyone.) Do you have any AU CC accounts? If so, the AU accounts can accidentally drop your FICO scores when the primary users don't realize how their actions can adversely affect the AU's FICO scores.