topic Re: Using cards in Understanding FICO® Scoring

Using cards

Anonymous — Sat, 04 Jul 2009 01:19:13 GMT

I used 3 credit cards that were about to be cancelled due to non-use. Each was for one tank of gas, a dinner, etc...

nothing over $100.

My score was reduced by over 30 points! What gives? I still have a high score, but I was under the impression that using a dormant card was better than losing it...

Mike

Re: Using cards

marty56 — Sat, 04 Jul 2009 01:27:04 GMT

Welcome to the forum. They same thing happended to me when I let 2 cards report a total balance under $50. My TU score is down 10 points for a $18 balance. I try now to PIF prior to the statement drop date which gives the CC use for the CCC yet the 0 balance for FICO score.

LOL its much easier sometimes to report a balance than to not report one.

Re: Using cards

Lel — Sat, 04 Jul 2009 05:48:46 GMT

Cards that are dormant for a long time and then show activity can lead to a drop in score. Having several cards reporting balances, even if your total utilization is not that high, can also cause a drop.

Like marty56 already mentioned, you can try to avoid this phenomenon by paying your card in full before the billing statement closes. A zero balance will be reported to the CRAs, but the credit card company is a little happier because you used their card. The risk of your card being involuntarily canceled is less. Consequently, your total revolving CL isn't decreased, and you're less likely to get a score drop due to a higher utilization ratio.

Re: Using cards

RobertEG — Mon, 06 Jul 2009 06:04:01 GMT

mikec100, it is all about capitalism! It is a different credit world out there now.

Keeping low balances low is always the best consumer financial and FICO strategy, and was viewed by most CCCs as showing low risk of default on your part, and thus a plus.

But when you PIF each month, or just keep your balances low, they are making little, or no interest.

They have to retain your account, and do their monthly reporting. With no money in their pocket.

Many CCCs have begun it reduce CLs in low usage accounts, or even close some that they dont see as being profitable. They are not in business to help you build or retain your credit score, they are in business to dig into you wallet.

Re: Using cards

Anonymous — Mon, 06 Jul 2009 12:28:56 GMT

I just got dinged 5 points for a $14 balance on my Chase card. The banks are reporting earlier. I pay the balance as soon as it comes out of pending and it still reported a balance of $14 even though it was paid the day it hit.

FICO is getting out of hand of decreasing points for such a tiny balance.

Re: Using cards

haulingthescoreup — Mon, 06 Jul 2009 22:05:11 GMT

This is a one-time drop from when the cards wake up. The scores should be back up the next month.

Re: Using cards

Anonymous — Mon, 06 Jul 2009 22:18:23 GMT

Thanks for all your input and suggestions...

I'll stay on top of it and let you know.

Mike