topic Re: What am I doing wrong? in Understanding FICO® Scoring

What am I doing wrong?

OntheHorizon — Fri, 09 May 2008 23:58:07 GMT

This is my first post, but I have been lurking around since Feb I think. I'll try to keep it short. My scores just don't seem to be rising, so I'm obviously doing something wrong. I haven't had any lates since 11/2006 and most recent collection was early 2006. I do have a total of 4 collections but all have long been paid. From what I have read I know util is killing me, but I still should be higher than I am. Up until 1 week ago 7 CC had a balance. I remember reading somewhere on here to dilute bad tradelines with good ones, so I went from 2 CC to 8 total. I have been really trying to pay them down, and I just paid cap1, cred1, and target to 0 balance (not yet reporting). What kind of bump can I expect if any since paying these to zero? I really want to get these scores up so I can refi my car for a better rate, preferably sooner than later. Any insight would be very much appreciated. BTW, most of these are fairly new, I've had Cap1 and Star for a little over a year, the rest a few months and 1 I just got last month.

1. Military Star Card 2299/2900 (high util I know)

2. Hooters 244/1100 (was 354)

3. Amex Delta Sky 574/1000 (was 634)

4. Credit Union 80/1000 (just received this last month)

5. Credit One VISA 0/700 (was 95)

6. Capital One 0/500 (was 82)

7. Target 0/500 (was 64)

8. Dillards 0/150 (haven't used in months)

May 08

TU617 EQ578 EX?

Feb 08

TU? EQ554 EX?

Re: What am I doing wrong?

shyboy — Sat, 10 May 2008 00:10:34 GMT

well 1 reason why your score are low is because the average age of your accounts are.

Re: What am I doing wrong?

Anonymous — Sat, 10 May 2008 00:17:40 GMT

You might try diversifying your TLs. My scores were stuck in the low 600s and high 500s. For over a year, I made various changes in CC utilization and my scores stayed about the same. When I got a car loan, the first month I lost 11 points, but every month since then my score has increased 7 points.

Re: What am I doing wrong?

OntheHorizon — Sat, 10 May 2008 00:24:14 GMT

I didn't even think about that aspect at the time I apped; but I notice it does say that my age is hurting my scores, ave is 3 years and some change. Too bad I learned about that aspect afterwards.

Re: What am I doing wrong?

smallfry — Sat, 10 May 2008 00:30:15 GMT

34 point increase in EQ in 3 months isn't bad at all. Pay all the cards down under 10%. The 4 collections will hurt. Average age of 3 years is not terrible. Stop applying and pay them down and see where you stand. Work on removing the lates.

Re: What am I doing wrong?

tmacar — Sat, 10 May 2008 05:06:20 GMT

According to your figures, you have a total of $6850 in available revolving credit. Your "old" usage was $3608, or 53%. Your "new" usage is 3197, or 47%. Your post was a couple months ago, so you probably already know this, but I wouldn't expect you to get much of a score increase, if any at all.

From everything I've been able to find out, you have to get below 30% to stop your revolving debt to credit ratio from hurting your score. In fact, the guy at my credit union a couple days ago said 20%, but I don't think he's right - too many others use the 30% figure.

From the fact that you posted here, I assume you are signed up with MYFICO. They have a score simulator you can use. I have an Equifax FICO of 658. I paid my revolving down from 81% to 15%. I'm waiting for the new balances to get reported, so I tried the simulator. It told me my score will go to between 728 and 768. That's an increase of at least 70 points, possibly as much as 110 points!

First, you have to have an Equifax report that you bought from them that is less than 30 days old. Then you go to the simulator, and plug in the changes you have made or are going to make, and it will tell you what (within a certain range) will happen to your score once the changes are on the report. You could try putting in different total amounts of pay down and find out how just much you'll need to pay to raise your score.

Re: What am I doing wrong?

RobertEG — Sat, 10 May 2008 07:32:25 GMT

Horizon, with all that is going on within your CR, I would not expect the FICO simulator to give you any useful short term prediction, and would not rely upon it The FICO sims are very limited in what you can input, and are basically one dimensional. I would not do any serious planning based on the sim.

Re: What am I doing wrong?

Anonymous — Sat, 10 May 2008 13:45:07 GMT

Robert- I disagree

The sim is very accurate on short tern utlization pay downs.

RobertEG wrote:

Horizon, with all that is going on within your CR, I would not expect the FICO simulator to give you any useful short term prediction, and would not rely upon it The FICO sims are very limited in what you can input, and are basically one dimensional. I would not do any serious planning based on the sim.

Re: What am I doing wrong?

OntheHorizon — Sat, 10 May 2008 14:59:10 GMT

Thanks for the input. I am a member and my scores are from here. Basically if I'm understanding everyone, I just need to get my util down and let things age, and then I'll see some real score increases, correct? Unfortunately my funds won't allow me to get my util down very quickly, I have to do this over time. Just thought someone could point out to me exactly where I'm lacking and I'd have a better understanding of what I need to do. From all that I have read here I pretty much knew that, but it seems like I've read so many stories about scores increases in 30-60 days, just seems like I'm increasing so slowly. I have used the simulator, trying out different scenarios; seems like 6 months or more gives me the biggest increases, so that tells me this game is more like a marathon instead of a sprint? I'll continue to pay things down, and try to get CLI from Cap1 and maybe one or two others, maybe that will help as well. Speaking of I've had Cap1 for over a year and no increase! I've called the backdoor # several times and same thing every time, no increase available blah blah blah. Hell even Cred1 gave me a higher limit right out the gate! Matter of fact all my other cards came with higher limits! Now that Cap1 is at 0, sock drawer they go!

I suppose I have done better, initially Americredit gave me 18% on my car in 9/07, then I refi w/HSBC at 14.59% in 1/08. Obviously I'm still not satisfied with that, so since I'm planning on keeping this car I would like to refi again at the end of the year for the final time, hence needing to raise scores quickly and hoping NFCU will assist with that. Sorry for the rambling. I'll continue on the straight and narrow until I get at least 630s all around. Thanks for everyones help!

4/19/08 TU617 EQ578 EX?

2/5/08 TU? EQ543 EX?

Re: What am I doing wrong?

smallfry — Sat, 10 May 2008 15:26:43 GMT

@Anonymous wrote:
Robert- I disagree
The sim is very accurate on short tern utlization pay downs.
@RobertEG wrote:
Horizon, with all that is going on within your CR, I would not expect the FICO simulator to give you any useful short term prediction, and would not rely upon it The FICO sims are very limited in what you can input, and are basically one dimensional. I would not do any serious planning based on the sim.

I agree with Robert. My utilization is under 2% always so maybe there is a limit to what the simulator can do for me but it always gives me a score range that is where I currently live and only 20 points higher. My EQ is 707. If I continue to pay my bills on time for 24 months my score will be between 707-727. Not much use in that now is there? Now if you have to the moon utilization and pay it down then maybe it can be useful but for me it foretells nothing.

Re: What am I doing wrong?

smallfry — Sat, 10 May 2008 15:30:49 GMT

oth get the utilization down. That is the biggest score killer that and new accounts. You will see the biggest score bump once you get all the cards under 9%. Capone? You must be in subprime land with them if you cannot get a meaningful CLI. Chances are you never will. I dumped them for that reason. Great rebuilder card but after you climb the ladder they have to go. Sockdrawer them.

Re: What am I doing wrong?

RobertEG — Sat, 10 May 2008 16:30:05 GMT

Disagree iif you will, but I stand by my post.

Re: What am I doing wrong?

tmacar — Sat, 10 May 2008 18:31:20 GMT

I SORT OF disagree with Robert. I've been monitoring my scores and following sites like this one ever since late 2005, when I was finally able to pay off all the things that went delinquent due to health problems, resulting in loss of income, in 2001.

What I have observed is that the score simulator at MYFICO seems to get less useful as you get into higher scores. It appears to me that the lower your score, the more use the simulator may be for you.

I also agree that what you can input is somewhat limited. HOWEVER, there is a specific input for paying your revolving credit down by whatever amount you want to, and this seems to be exactly what you most want to know right now.

Unfortunately, according to what you have said, paying down revolving, making absolutely certain that you NEVER have even a single 30 day late payment from now on, and refraining from applying for ANY new credit cards are all you can really do at this point to increase your score. Your revolving debt to credit ratio IS hurting you pretty badly, but even paying it down below 30%, or even below 20%, probably won't get you above the very low 600s, and I know from experience that low 600s is not a very good score.

Also note that requesting a CL increase on an existing card will generate an inquiry which will hurt your score exactly the same as an inquiry that resulted from an application for a new card will. And in your situation I don't think you want to have any more than 3 inquiries within the last 12 months. By the way, didn't your Capital One card come with an automatic increase program where if you paid on time and did not go over limit for the first 3 months they would automatically raise the CL? Mine came with that program. IN fact, they even gave me a break and let me have an extra chance at it after I went over limit in that period due to fees and interest charges.

Your main problem is time, and there's nothing you can do to fix that. Your negative stuff isn't that old, and, it seems, neither are your current accounts. You have relatively recent collections on your report and those have a worse negative effect on your score than even accounts with late payments. Even paying a collection doesn't have very much positive effect. In fact, I suspect it has no immediate positive effect on the score. About the only thing worse for your score than a collection is a judgment, and the only "cure" for a collection is time. Once it's paid, the older it gets the less effect it will have on your score.

The one thing you CAN do is try to get it off your report. If you have an open collection, offer to pay it in full, rather than settling (collection companies will always offer a settlement amount less than the total), if they will agree to remove it completely from your report. If they are working for the original creditor (as opposed to either working for someone who bought the account from the original creditor, or being the actual current owners because they themselves bought it), you can even try to get an agreement to remove the original delinquent account listing. Unfortunately, if the original guys sold the account and the collector is either working for or is the new owner, they won't be able to do anything about the original delinquent account listing, and it will stay on your report until 7 years after the last activity.

You may be told that they either cannot remove the collection or that they never do that kind of thing. The person you are talking to may even believe that to be the case, but it is not. Whoever has reported an account to the credit bureau has the ability to have it completely removed. You may have to get up the supervisory chain to find the person who has the authority to agree to a deletion in return for payment in full, but that person does exist.

If you do get the agreement, make sure you have it in writing before paying them. Also make sure it specifies some time, such as "immediately upon receiving payment in verified funds". If it doesn't mention something like that, they could take months to get around to doing the deletion. Also make sure the agreement does not say they will delete the "trade line" - the "trade line" is the original account listing. You need a "collection account" deleted, not a "trade line". If the collection agency is working for the original creditor, you might try to get the "trade line" deleted too, thereby eliminating any record of delinquency, but the "collection account" is the score killer you need to lose.

If you have already paid all your collections, you obviously cannot use this strategy. However, you can still do what the credit "repair" outfits do. Wait a few (3 or 4, I'd say) months after you paid the collection, then file a dispute with the credit bureaus. If they verify the collection, wait at least a month and dispute it again.

Each dispute you file creates 2 different possibilities for getting rid of the thing. First, some collection companies will, occasionally, actually ignore a dispute and not answer it if the thing has already been paid. Second, there is a time limit, and they may fail to answer the dispute in time. This second possibility is the reason you keep filing disputes even after a collection has been verified. In either case, the result is that the bureau has to delete the account from your report.

There are a couple of things to be careful of if you do not want a credit bureau to refuse to process a dispute because it is "frivolous" since they previously verified the collection (Experian especially loves to pull that one). First, if a collection is verified, wait at least a full month before disputing it again. In fact, 2 or 3 months is even better. Second, you have to give a specific reason for each dispute. Your first dispute might be over the Date of Last Activity. In fact, THAT date often IS wrong in collection listings. It's supposed to be the date of the last time you paid the original creditor or did something like telling the creditor you were going to pay. Collectors sometimes use when you paid the collection as Date of Last Activity. In any case, your second dispute might be about the dollar amount involved. Your third dispute might be about how many 30 day late payments you had. And so on. And if you get an answer from a bureau saying they already verified the account so your dispute is frivolous, point out that you did not dispute and they did not verify THIS part of the listing.

You may be surprised at the success you can have in getting things off your report through repeated disputes.

One last bit of advice. Everyone says a score above 720 is golden, so that seems a good target to shoot for. You will, however, qualify for loans before reaching that point. By the time you reach something like 620 or 630, you will probably find you can borrow from several sources, not necessarily limited to finance companies, either. At that point, try some banks and/or credit unions. Borrow enough money to get your revolving debt to credit ratio at least below 30%, below 20% if you can borrow that much. And tell the lender exactly what the money is for. Knowing you're going to use it to pay down revolving debt is usually a plus for you in their decision making process. (I'm guessing you will probably not have been able to get it that low before then.) The thing is, if you're in the 40s, 50s, or even higher, with a score around 630, and you suddenly get it under 30% or even 20%, you will see a large score increase, probably to something above 700.