topic Re: WTF - Why did my TransUnion FICO score DROP after CREDIT CARD PAID OFF????????? in Understanding FICO® Scoring

WTF - Why did my TransUnion FICO score DROP after CREDIT CARD PAID OFF?????????

Anonymous — Thu, 10 Apr 2008 19:21:29 GMT

I worked hard to get my credit card balance paid off just to see my score plummet 30 points! This is such a messed up system.

I worked like the devil to get my score to go up.

FICO simulator says pay down credit cards to 0.00, and score will raise 30-40 points.

But mine dropped 30-40 points! WTF?

You cant win with capitalism.

Score is lowered if you have too much debt. Score is lower if you have paid off credit card debt.

I have no other debt besides a small car loan balance.

i am trying to be debt free (before i buy a house). will i have trouble getting a good loan rate - should my score continue to plummet with no credit card debt on record?

this is RIDICULOUS.

Re: WTF - Why did my TransUnion FICO score DROP after CREDIT CARD PAID OFF?????????

Anonymous — Thu, 10 Apr 2008 19:31:36 GMT

The only thing FICO sees is what is reported to the CRAs. Your score will drop if all of your revolving accounts report $0, because FICO gives you points for responsible use of credit. Showing all $0 balances is not an indication of using credit responsibly; it is an indication of not using credit at all.

For maximum FICO points, allow a balance of 1-9% of the limit to report on one card only.

Re: WTF - Why did my TransUnion FICO score DROP after CREDIT CARD PAID OFF?????????

llecs — Thu, 10 Apr 2008 19:35:18 GMT

Is there any possibility that something else is happening on your reports (e.g. added account, added collection, higher utilization, lates, etc.)?

Re: WTF - Why did my TransUnion FICO score DROP after CREDIT CARD PAID OFF?????????

Lel — Tue, 15 Apr 2008 20:36:18 GMT

cheddar wrote:
The only thing FICO sees is what is reported to the CRAs. Your score will drop if all of your revolving accounts report $0, because FICO gives you points for responsible use of credit. Showing all $0 balances is not an indication of using credit responsibly; it is an indication of not using credit at all.

For maximum FICO points, allow a balance of 1-9% of the limit to report on one card only.

For the purpose of clarification, you are saying that one should allow a balance of 1-9% of one's total revolving credit, not 1-9% of the credit limit on a particular card. Is this correct?

I just experienced a 13 point drop (798 to 785) in my Equifax score after starting to use a previous-idle credit card. ScoreWatch flagged it when it sent me an alert, indicating that using this card made it look like I was in need of additional credit. It seems absurd that spreading charges among more cards would be seen as a negative factor if the total utilization is unchanged.

I currently use 6 different credit cards (two gas cards, an Amex, two Visa with different rewards programs, and a Upromise MasterCard). In addition, I have three installment accounts (two mortgages and a student loan). After reading what cheddar said, I will try to either stop using some of these cards or pay them before posting and see what effect this has on my credit score.

Re: WTF - Why did my TransUnion FICO score DROP after CREDIT CARD PAID OFF?????????

Anonymous — Tue, 15 Apr 2008 21:29:36 GMT

Lel, it's confusing isn't it? Not only that, it's just not logical, imo.

It makes total financial management sense to me, but not to FICO which only measures risk exposure.

For maximum FICO scoring purposes the theory is let one half of your cc's report $0.00 balance, and the other half 1%-9% on each card. In addition, FICO measures both individual utilization AND overall utils in the scoring model.

Re: WTF - Why did my TransUnion FICO score DROP after CREDIT CARD PAID OFF?????????

Anonymous — Wed, 16 Apr 2008 00:30:45 GMT

No all i have a small car balance now little under 2K . thats it. student loan paid off. i've been working hard for the past 2 years to eliminate ALL of my debt. I'll be finished in early May.

TU - 777, just dropped to 759 - reason score dropped they say was that i have no credit card debt now. this fico score has always been lower than the other two THIS PISSES ME OFF TO HIGH HEAVENS.

EQ - 783 - score goes up but fluctuates more, stays in the middle

EX - 791 - score has been consistently higher than the other two, and consistently goes up. Experian has been fair to my situation imo.

What is the 1-9%? of your total credit card limit (all cards), or being a slave to just one credit card sufficient enough to get a mortgage and live a decent life?

Re: WTF - Why did my TransUnion FICO score DROP after CREDIT CARD PAID OFF?????????

Anonymous — Wed, 16 Apr 2008 00:36:10 GMT

I guess it dropped 18pts but it feels like 40.

i want to know why Suze Ormans fico advice section gives the WRONG advice????

she should say DONT pay off your CCs, but leave a small balance and your FICO score will go up.

NOT, pay down your cc over the next 24 months and your score will be raised 20-40 pts.

that is simply a lie and false hope.

Re: WTF - Why did my TransUnion FICO score DROP after CREDIT CARD PAID OFF?????????

Anonymous — Wed, 16 Apr 2008 16:47:03 GMT

In a few months you will see the benefits.......I have no revolving debt anymore and I lost a bunch of points, but they went back up and kept going. As the months go on with 0 balances reporting repeatedly you will see a gain.