topic FICO dropped with $39 credit! in Understanding FICO® Scoring

FICO dropped with $39 credit!

bichonmom — Mon, 05 Dec 2011 03:10:52 GMT

This is very odd. With 3 new CCs reporting, I was afraid my score would drop, but it didn't change a single point.

Then today I got an alert that a) my Walmart balance changed from $150 to $111 (I ret'd an item; haven't made 1st pmt yet.) and b) my score dropped from 663 to 656.

The Walmart card had been previously reported twice: once @ 0 balance when I got in on 11/17. Then on 11/25 it reported increase to $151 balance. With both of those, my score didn't change. Then today's reduction triggered a drop of 7 points!

Between 9/25 and now, it has dropped from 675 to 656, nearly 20 points. I'm kind of freaking out here. Could the score drop be a delayed result of the 3 new CCs and drop in AAoA? I don't understand how the Walmart balance decreasing $39 would drop my score 7 points. That is the *only* change on my CR.

Any ideas?

Re: FICO dropped with $39 credit!

RobertEG — Mon, 05 Dec 2011 04:17:30 GMT

I would look closely for other changes in your CR. A card going from $0 to $1 could trigger a change in percent of cards with a reported balance, but with that low of a util, it would probably have no negative effect on individual card utils or overall util. I suspect that something else has changed.......

Re: FICO dropped with $39 credit!

bichonmom — Mon, 05 Dec 2011 04:25:26 GMT

I've checked my report on USAA (which has all 3). No other changes. Plus, I've gotten no other alerts from EQ Score Watch, either.

Re: FICO dropped with $39 credit!

pizzadude — Mon, 05 Dec 2011 14:28:16 GMT

What did your utilization% look like before and after the credit posted on your report ? The utilization "sweet spot" for some people is 9% reporting on one card, but it varies, other people report better scores at 5% or 3%.

Re: FICO dropped with $39 credit!

bichonmom — Mon, 05 Dec 2011 14:42:24 GMT

Util % didn't change w/the $39 credit. It is and was 14%. If the util affected my score, than it should have changed before, when my util *did* change. Or, it should have changed before, when one or more of my new CCs were reported. Instead it changed when one CC bal went from $150 to $111?! Just doesn't make any sense. I'm wondering if there is a delay in the FICO score change. Because the *only* change in my report was this reduction in the balance. And I just checked my USAA CR again, and all 3 are right. There is nothing else new showing on any of the CRs.

Re: FICO dropped with $39 credit!

CreditAble — Mon, 05 Dec 2011 16:57:41 GMT

@bichonmom wrote:
This is very odd. With 3 new CCs reporting, I was afraid my score would drop, but it didn't change a single point.

Then today I got an alert that a) my Walmart balance changed from $150 to $111 (I ret'd an item; haven't made 1st pmt yet.) and b) my score dropped from 663 to 656.

@Anonymous Walmart card had been previously reported twice: once @ 0 balance when I got in on 11/17. Then on 11/25 it reported increase to $151 balance. With both of those, my score didn't change. Then today's reduction triggered a drop of 7 points!

Between 9/25 and now, it has dropped from 675 to 656, nearly 20 points. I'm kind of freaking out here. Could the score drop be a delayed result of the 3 new CCs and drop in AAoA? I don't understand how the Walmart balance decreasing $39 would drop my score 7 points. That is the *only* change on my CR.

Any ideas?

It is a fact that Fico can actually go down when a balance approaching $0 is obtained. In many cases "$0" reporting will generate a few points lower than a slightly higher balance would have.

A lower balance does not always generate a higher score. If I were you I would not worry about it. Just use your actual data points to plan your strategy for the future. In months that you want to allow a balance to report on your Walmart card, prepay the card down to $150 before the statement drop.

In other words, either allow a balance of $0 or $150 to report on statement drop for your Walmart card. Trial and error will enable you to determine the appropriate "optimal" reporting balances for your other cards. Of course there are possibly other factors that are in play, but it seems that you have discovered the optimum reporting balance for your Walmart card.

More info can be found by clicking on the following thread.

http://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Playing-with-reporting-balances-to-find-the-FICO-sweet-spot/m-p/577108/highlight/true#M41399

Even more info can be found by typing "sweet spot"

in the "Board" Search field at the top of this page.

It will be less confusing it you don't use the drop down menu options.

Simply enter "sweet spot" (include the quotation marks).

Make sure that "Board" is selected then click "Search".

Read through the posts to find the posts that pertain to your issue.

Warning: Digging too deeply into this issue can fry your brain.

Re: FICO dropped with $39 credit!

bichonmom — Mon, 05 Dec 2011 20:42:54 GMT

My balance didn't go down to 0. It went from $150 to $111. And my util% did not change at all. It was 14% last week and it's still 14% as of today. So the $39 credit did not affect my util% at all.

1 inq & 3 new CCs (for 7 total) did not change my FICO at all. But one CC going from $150 to $111 caused it to drop 7 points.

Re: FICO dropped with $39 credit!

Jazzzy — Tue, 06 Dec 2011 02:11:36 GMT

Are you saying that you got a Scorewatch alert saying your score had changed?

MyFico only checks for changes every so often. There is no way you can blame the drop on a slight balance decrease. If you have been adding cards, you have been lowering your AAoA. You have new accounts...that can ding you.

Trying to find a reason for every change will make you crazy. It doesn't work that simply.

Re: FICO dropped with $39 credit!

bichonmom — Tue, 06 Dec 2011 02:33:16 GMT

Yes, I got a SW alert with 4 items:

This e-mail is to notify you that the following changes have occurred on your credit file:

The target credit score you configured for notification has been passed or reached.

Your credit score changed and as a result you may qualify for a different loan rate.

an account balance decreased by a specified amount

an account balance decreased by a specified percentage

The week before, when all of the CCs were on my CR, I pulled my EQ FICO and it was 663. Hadn't changed at all from before the new CCs reporting.

Then I rec'd the email, and the only change to my CR was the $39 cr on Walmart acct.

Re: FICO dropped with $39 credit!

MarineVietVet — Tue, 06 Dec 2011 03:34:58 GMT

I agree with Lynette. Score changes are normal and often a clear explanation as to why is elusive. I would not be too concerned with this.

(Of course it's not my score so it's easy for me to say not to worry )

From a BK years ago to:
EX - 3/11 pulled by lender- 835, EQ - 2/11-816, TU - 2/11-782

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

Re: FICO dropped with $39 credit!

bichonmom — Tue, 06 Dec 2011 04:15:27 GMT

Well, I guess I am paying the piper for my 3 new CCs. It's just odd that it happened at the exact same time as the Walmart balance update.

I ran some scenarios on SW estimator and it looks like a dept store card lowers your score; whereas a bank CC has a better chance of increasing it. Plus, I know I zapped my AAoA, which was nil to begin with. I guess the best thing I can do is hope for CLIs w/the CCs I have and hope that in time my score w/rebound from this... and improve overall. I *really* want to be over 700.

Re: FICO dropped with $39 credit!

CreditAble — Tue, 06 Dec 2011 05:12:08 GMT

@bichonmom wrote:
My balance didn't go down to 0. It went from $150 to $111. And my util% did not change at all. It was 14% last week and it's still 14% as of today. So the $39 credit did not affect my util% at all.

1 inq & 3 new CCs (for 7 total) did not change my FICO at all. But one CC going from $150 to $111 caused it to drop 7 points.

Unless I miss read your prior post, didn't you state that your credit score was exactly the same when you had $0 balance as it was when you had $150? When the balance became $111, you lost 7 points.

You state that your utility didn't change (14% last week and today), but did your balance change by $39 or not? If the balance was different (lower) by even $39 it is still possible to loose 7 points. The point I was trying to make was that your score can go down even if your utility goes down. Even if your utility when rounded up to the nearest whole percent is still 14%, you can still get a score drop of 7 points with a $39 reduction in balance.

Re: FICO dropped with $39 credit!

Anonymous — Fri, 16 Dec 2011 20:54:34 GMT

To really answer the question, why did the score drop, well the answer is you returned an item. To the store this is a bad thing, just like a late payment. Because it was not a late payment, it can not be placed on the report. This is part of the scoring that we do not ever see or know about. I agree the others, don't worry about it. Your score will return to the previous number most likely after the next rundown of the scoring system in the next 90 days. I have seen this over and over again, in my consulting practice. This is really no big deal. If the number keeps declining, then a strong chance of bad information has been fed into the system. If in 90 days the problem has not corrected it self, then get a new copy of your credit report (and pay for it) find the error, and dispute it.

Re: FICO dropped with $39 credit!

haulingthescoreup — Sat, 17 Dec 2011 02:01:33 GMT

@Anonymous wrote:
To really answer the question, why did the score drop, well the answer is you returned an item. To the store this is a bad thing, just like a late payment. Because it was not a late payment, it can not be placed on the report. This is part of the scoring that we do not ever see or know about. I agree the others, don't worry about it. Your score will return to the previous number most likely after the next rundown of the scoring system in the next 90 days. I have seen this over and over again, in my consulting practice. This is really no big deal. If the number keeps declining, then a strong chance of bad information has been fed into the system. If in 90 days the problem has not corrected it self, then get a new copy of your credit report (and pay for it) find the error, and dispute it.

Whaaaaaat?????

I don't know what kind of "consulting practice" you have, but this is absurd. The ONLY things that are considered for scoring are on your credit reports.

Grumpy stores do not affect your scores, unless they put some sort of incorrect info on your reports.

Re: FICO dropped with $39 credit!

haulingthescoreup — Sat, 17 Dec 2011 02:19:49 GMT

@bichonmom wrote:
Yes, I got a SW alert with 4 items:

This e-mail is to notify you that the following changes have occurred on your credit file:

The target credit score you configured for notification has been passed or reached.
Your credit score changed and as a result you may qualify for a different loan rate.
an account balance decreased by a specified amount
an account balance decreased by a specified percentage

The week before, when all of the CCs were on my CR, I pulled my EQ FICO and it was 663. Hadn't changed at all from before the new CCs reporting.

Then I rec'd the email, and the only change to my CR was the $39 cr on Walmart acct.

Any birthdays? Any change in AAoA or oldest account age? Any negatives get a year older? (For instance, from 1y 11m to 2y 0m.) Anything fall off your reports? (This is easy to overlook.)

How long have the three new cards been showing up on your reports? Did you actually pull a score after all three showed up, or were you expecting (hoping, praying, wondering if) Scorewatch would alert you?

I'm having problems with SW again.

Re: FICO dropped with $39 credit!

bichonmom — Sat, 17 Dec 2011 03:05:17 GMT

In going back over my USAA archives, I found that my only collection dropped off of my EQ rept early. It was due to drop off in Jan/Feb. It's still showing on EX and TU. I don't know why it dropped off early. I had been counting on my score going up when it came off. It was very dissapointing to see my score go down instead of up now that the collection dropped off. No more baddies, so it looks like the rebucketing sank me.

My score just dropped even more. I think it's 630 now. I lost about 20 points when the Barclay's iPad charge reported. My total Barclay's CL is $2200 and the iPad charge was around $750.

My score has gone from 675 in May/June to 630 now. Really bummed. I plan on paying the balances reporting, except for Barclays, and see what happens w/my score. But I think between my AAoA dropping due to new CCs and rebucketing, my FICO is in the toitie.

Re: FICO dropped with $39 credit!

RobertEG — Sun, 18 Dec 2011 01:44:28 GMT

With the unkowns in the FICO scoring process, it can be frustrating to understand how shifts affect score.

Rebucketing, or shift in categorization of your file, could be a factor.

Even within the same bucket, apparently simple shifts that one might not focus on, such as individual card (vs overall) utils, or percent of cards now reporting a balance, could change, even with overall % util staying the same, and result in a "mysterious" score shift.

I would not be as concerned with shifts in score based on util as I would in other categories, as % util has no historical memory. If, for example, one card shoots up in % util as compared with the others, or if the percent of total cards reporting a balance, your score would change. However, it is recoverable in subsequent months.

The mysteries of the proprietary FICO bucketing and scoring determinations are endless......

Re: FICO dropped with $39 credit!

bichonmom — Sun, 18 Dec 2011 02:13:25 GMT

@RobertEG wrote:
With the unkowns in the FICO scoring process, it can be frustrating to understand how shifts affect score.
Rebucketing, or shift in categorization of your file, could be a factor.

Even within the same bucket, apparently simple shifts that one might not focus on, such as individual card (vs overall) utils, or percent of cards now reporting a balance, could change, even with overall % util staying the same, and result in a "mysterious" score shift.

I would not be as concerned with shifts in score based on util as I would in other categories, as % util has no historical memory. If, for example, one card shoots up in % util as compared with the others, or if the percent of total cards reporting a balance, your score would change. However, it is recoverable in subsequent months.

The mysteries of the proprietary FICO bucketing and scoring determinations are endless......

and frustrating.