topic FICO SCORE DROPPED 16 POINTS due to $4 charge in Understanding FICO® Scoring

FICO SCORE DROPPED 16 POINTS due to $4 charge

Anonymous — Tue, 10 Nov 2009 11:33:22 GMT

I got a credit alert yesterday, from Score Watch...

"There are a few changes to your credit report today:

An account shows a balance increase.

Also, your FICO® score has decreasedelling me that my credit score."

I logged in to myfico to see what was going on and got this message.

"You received this alert because this balance which was previously $0 increased to $4. Your FICO® score decreased to 695 on November 8, 2009."

On Oct. 27th, my FICO score was 711. The $4 charge to this credit card is the annual fee, billed monthly.

How is it possible for $4 charge to cause a 16 point drop? What can I do about it?

Re: FICO SCORE DROPPED 16 POINTS due to $4 charge

marty56 — Tue, 10 Nov 2009 12:23:50 GMT

Quite possible. If you where showing 0% util or had other cards reporting a balance and added 1 more it could do that. FICO always rounds up so $1 is the same as a full 1% or your CL. I assume that nothing else changed on your CR. For me, TU likes 0% util while EQ doesn't.

Re: FICO SCORE DROPPED 16 POINTS due to $4 charge

Anonymous — Tue, 10 Nov 2009 12:24:28 GMT

Hi copaco! Welcome to the myFICO forums!

copaco wrote:
I got a credit alert yesterday, from Score Watch...

"There are a few changes to your credit report today:
An account shows a balance increase.

Also, your FICO® score has decreasedelling me that my credit score."

I logged in to myfico to see what was going on and got this message.
"You received this alert because this balance which was previously $0 increased to $4. Your FICO® score decreased to 695 on November 8, 2009."

On Oct. 27th, my FICO score was 711. The $4 charge to this credit card is the annual fee, billed monthly.

How is it possible for $4 charge to cause a 16 point drop? What can I do about it?

There's several possibilities:

This card that reported the $4 balance, was it previously idle for the last 3 months or more?
Did you have balances on other cards? If this additional balance caused half or more of your cards to report a balance, that might account for it.
Did you pull your full reports from the CRAs? Something else may have caused your score drop.

Re: FICO SCORE DROPPED 16 POINTS due to $4 charge

Anonymous — Tue, 10 Nov 2009 12:38:59 GMT

Thank You!

It may have been idle. It's usually in a credit balance. They bill the annual fee in monthly installments and since they charge me to pay the bill online, I send a check usually paying 3 or 4 months at a time. I also have $1200 balance on my other card, Best Buy. I haven't had any other score watch alerts and there have been no other changes to my credit, other than paying on time and paying it down. I didn't pull a full report though, I guess that's next...16 points seems excessive for a $4 balance increase.

Thanks Again!