topic Re: Huge Score Drop, Why? in Understanding FICO® Scoring

Huge Score Drop, Why?

Anonymous — Sat, 19 Sep 2015 15:57:30 GMT

Paid the balance of my card and my score dropped 53pts! I want to kill someone.... Every article I have read, recommends paying in full each month the balance. So next month if I pay it in full againg, what? another huge drop? I know about the utilization ratio, but it should not be that big of a drop simply by paying the balance, then nobody would be paying the balance on their card, like the so call experts recommends.

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Re: Huge Score Drop, Why?

Anonymous — Sat, 19 Sep 2015 16:41:00 GMT

Answer can be found in these threads a few down from yours:

http://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/EQ-18-point-drop-after-util-reduction/td-p/4224601

http://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/SCORE-DROP/td-p/4232766

Re: Huge Score Drop, Why?

jawbrkr — Sat, 19 Sep 2015 19:11:10 GMT

This happened to me just recently. I mistakenly paid off my cap1 card to $0.00 before the statement cut date. When the statement cut, it showed a zero balance. The problem is my other 4 cards also had reported a zero balance on statement cut date as I had paid them all down. All cards reporting zero is never good, I learned. I am assuming this is what happened to you. You have to let one card report a balance. Once it is reported then you can pay it off. All other cards you own can be paid to zero before statement cut.

Re: Huge Score Drop, Why?

Anonymous — Sat, 19 Sep 2015 19:36:25 GMT

I knew about how credit score is put together(pay history % roatio, etc) and always read that is good to pay the cards in full. So getting a huge drop by paying all the card was a surprise, and like you I learned.

I've been doing a little searching to understand the whole reporting balance to the CB. So far this is what I understand (correct me if I'm wrong).

Best approach to boost CS is to:

1. Pay all cards in full except one

2. Play with 1-10% balance on that one card with balance (see what % gives a better boost)

3. Pay 2 times a month. One, before billing cycle ends so a low utilization ratio is reported (1-10%) and again before due date to avoid paying interest.

For example, in my case, my open date is the 8/24/15 and close date is 9/15/15 so if I'm using 45% of line credit, but I don't want my credit score getting hit by using more than 30% of my CL I should pay $X.XX BEFORE (3-5 days?) the CLOSING DATE and drop the utilization rate to <10%. This will result in a <10% utilization rate being reported to the CB instead of 45%. Then I should pay the remaining balance in full so I don't have to pay any interest. Repeat strategy.

Is this correct? I need to recover from this drop. Any other recommendations?

Re: Huge Score Drop, Why?

gdale6 — Sat, 19 Sep 2015 21:54:34 GMT

Hi there OP, I have removed your cross posted thread on this topic from the General Credit Forum. Our TOS doesnt allow for cross posting and it really isnt a good thing to do as it can lead to confusion of the members, please refrain from doing so in the future.