topic Re: UPDATE Re: Arrrgh. Paid off all credit cards but one, and score dropped in Understanding FICO® Scoring

Arrrgh. Paid off all credit cards but one, and score dropped

gamegrrl — Mon, 14 Feb 2011 21:57:02 GMT

I recently (within the past month) paid off several credit cards. None of them were HUGE, but a couple of them had high utilization.

I'm also in the midst of trying to fix the status reporting of old, defaulted but rehabilitated student loans.

The only other thing that should have changed recently is that I had a collection showing that was in error (had been paid to OC way before it ever went to the CA), and they apologized and said they'd send a removal to all three Credit Reporting Agencies: This just happened last Friday, February 11th.

I haven't charged anything at all, other than a $30 birthday gift for my mom on my Amazon card, which had a balance of $0 before I made that purchase.

I don't have any late payments showing for the past five years or anything else that I would construe as being negative, nor should anything negative have happened in the past month.

So I got kind of excited when I got a Score Watch email today saying my score had changed. Frankly, I expected it to go up. It DROPPED from 663 to 656. I am very bummed.

The explanation includes the paragraph below as a possible reason for the drop, which I am clinging to as, I guess, the best case scenario. In your experience, is this valid?"

You moved from one category of credit users to another as time passed. For example, you may have transitioned from the category "consumers with a new credit history" to the category "consumers with a two- to five-year credit history". As a result, your credit report is evaluated differently, causing a slight change in your score. The good news is that moving between categories like this usually offers you the potential to reach a higher FICO® score in the future.

Re: Arrrgh. Paid off all credit cards but one, and score dropped

MarineVietVet — Mon, 14 Feb 2011 22:04:08 GMT

It looks like your were "rebucketed" as it's called around here. You are now being grouped together with people who have a longer credit history than you and so compared to them your credit profile is a little worse and so your score dropped. But being rebucketed is actually a good thing in the long run. It means your credit is slowly improving.

I can't explain the subject very well but here Rebucketing is discussed to greater length.

From a BK years ago to:
EX - 9/09 pulled by lender 802, EQ - 10/10-813, TU - 10/10-774

"Some people spend an entire lifetime wondering if they've made a difference. The Marines don't have that problem".

Re: Arrrgh. Paid off all credit cards but one, and score dropped

gamegrrl — Mon, 14 Feb 2011 22:49:18 GMT

Well I bit the bullet and used up my last "free" Score Watch Score Report. I went over everything line by line, and the only difference between this report and the one a month ago is a bit of credit card paydown (but only about 1/3 of what I've actually paid down, as it's not time for the others to report yet).

That pesky erroneous collection is still in place, though the CA submitted it today.

The CC accounts not showing the payoff I did yet still show decreases in balance from the regular payments I've made since last month.

I have a 12 year credit history and AAoA is 6 years, the same as last month

So, given all that, I have to guess that for some reason I did end up in a different bucket. I think that's a good thing, and when that collection goes away (soon!) and all my other payoffs show up (soon!) I hope I'll see a jump that more than makes up for this minor (and annoying) drop.

Re: Arrrgh. Paid off all credit cards but one, and score dropped

RobertEG — Fri, 18 Feb 2011 08:59:47 GMT

I agree with marinevet. It may be a bit disheartening to see a small score drop when you move up in scoring buckets.

Why is this good?

When you were in a lower scoring bucket, the derogs in that bucket carried more negative impact. When FICO noticed the improvement in that category, you were moved over into new scoring algorithm (bucket) that now puts more focus on a different category. For example, cleaning up old derogs may move you out of a "dirty" scoring algorothm, and you are then compared with others in a clean credit history category. Initially, you may not compare as favorably to other consumers in that new comparison bucket, but as you move up, the buckets generally become less serious, and easier to improve. For example, with a clean credit file, the next most important bucketing is % util. It is much easier to improve in % util, which has no historical memory. Thus, overall score improvements can in fact be easier to achieve. Overall, it is a good thing.

Re: Arrrgh. Paid off all credit cards but one, and score dropped

gamegrrl — Fri, 18 Feb 2011 13:11:59 GMT

Thank you so much! I sure hope this was a bucket move, and given the facts, I truly think it was.

Now all of those CC payoff/paydowns, the removal of the only collection, etc. should eventually start adding points.

UPDATE Re: Arrrgh. Paid off all credit cards but one, and score dropped

gamegrrl — Fri, 25 Feb 2011 00:50:02 GMT

I got a Scorewatch alert tonight. My Equifax (which took a recent dive, possible new bucket) just went from 656 to 670. More progress! Yay!

Re: UPDATE Re: Arrrgh. Paid off all credit cards but one, and score dropped

Anonymous — Sat, 26 Feb 2011 02:16:06 GMT

Congratulations!!