topic Re: please help me understand why my score dropped drastically? in General Credit Topics

please help me understand why my score dropped drastically?

Anonymous — Sun, 24 Feb 2019 20:03:28 GMT

I started a car loan in August 2018 which the bank reported to the credit unions on Sept 10, 2018. On Sept 12, 2018 my score dropped by 63 points. The bank told me that they will start the installments after 2 months. So they did not deduct any installment uptil Nov 2018. Again on Oct 5 my score dropped by 68 points. From very good score which was above 750 my current score is 639. When it was the bank's decision to start the installments after two months why my score dropped? I have not missed any of the installment. What can I do to bring the score back up? I have only two credit lines and the first one started only 2 years back when I moved to US. I am planning to buy a house and the low score is hurting.

Re: please help me understand why my score dropped drastically?

RobertEG — Sun, 24 Feb 2019 21:16:20 GMT

Calculate your average age of accounts before and after addition of the new account with only two month's age.

With a thin file, it may be very significant......

Re: please help me understand why my score dropped drastically?

Anonymous — Sun, 24 Feb 2019 21:19:27 GMT

My oldest account is little more than two years. What do I do to bring it up? Should I pay some part of my car loan? I took a car loan to build another credit line but the result was opposite

Re: please help me understand why my score dropped drastically?

FireMedic1 — Mon, 25 Feb 2019 00:53:14 GMT

What is the other credit line besides the car? And yes AAoA under 2 yrs hurts. Since it looks like you took a hit. If you have 1 CC. Another will help. But either way its going to take time.

Re: please help me understand why my score dropped drastically?

Anonymous — Mon, 25 Feb 2019 03:12:00 GMT

Where are you getting your scores from?

Re: please help me understand why my score dropped drastically?

Anonymous — Mon, 25 Feb 2019 11:08:44 GMT

You should go through your reports carefully and see if something else is going on at the same time. I could believe a score drop initially when the loan appears (although a 63pt drop seems extreme), but the loan causing a subsequent 68pt drop the following month doesn’t make sense. I don’t have any explanation why you’d lose 131pts this way. I would think something else happened (assuming as Overmedicated implied, that you are reading FICO scores).

Re: please help me understand why my score dropped drastically?

Anonymous — Mon, 25 Feb 2019 21:21:51 GMT

@Anonymous wrote:
On Sept 12, 2018 my score dropped by 63 points.

What score? What is the source of your score? If it isn't a FICO score it isn't relevant or meaningful.

Re: please help me understand why my score dropped drastically?

FlaDude — Mon, 25 Feb 2019 21:54:36 GMT

@Anonymous wrote:
When it was the bank's decision to start the installments after two months why my score dropped? I have not missed any of the installment.

Unless it was reported as a late payment (over 30 days), when your first payment was made shouldn't matter. As @ImTheDevil, said, you need to pull your credit report for the bureau that your score is from to see what is in there. If there are any late payments, then a drastic score drop is no surprise. If you feel there was an error or misunderstanding, you might be able to talk to the lender and see about getting the late reports removed, often called a goodwill (GW) removal.

Without knowing more about what is in your credit report, we're just guessing.

Re: please help me understand why my score dropped drastically?

Anonymous — Mon, 25 Feb 2019 22:03:52 GMT

@Anonymous wrote:
@Anonymous wrote:
On Sept 12, 2018 my score dropped by 63 points.
What score? What is the source of your score? If it isn't a FICO score it isn't relevant or meaningful.

This is my credit score from Experian. I have created an account on their site and keeps sending me alert about credit score increase and decrease. I was not paying much attention to it. But lately I pulled a credit report from them and found that my credit score was 639. I went back and looked at the alerts and found two alerts on sudden decrease of over 60 points in September and October, just after the lender informed the credit bureau of my new car loan account.

So, are you saying that I should not worry about this credit score at all? I am looking for a house and dont want anything to come as a surprise while applying for a mortgage loan.

Re: please help me understand why my score dropped drastically?

Anonymous — Mon, 25 Feb 2019 22:07:47 GMT

@Anonymous wrote:
You should go through your reports carefully and see if something else is going on at the same time. I could believe a score drop initially when the loan appears (although a 63pt drop seems extreme), but the loan causing a subsequent 68pt drop the following month doesn’t make sense. I don’t have any explanation why you’d lose 131pts this way. I would think something else happened (assuming as Overmedicated implied, that you are reading FICO scores).

The credit score is on my Experian statement. I registered on Experian site for an account and pulled the credit report. When I looked at the credit alerts it showed two sudden drops in Sept and Oct. Should I pull a credit report from annualcreditreport.com, but it will not give my credit score. What is the other option? Thanks.

Re: please help me understand why my score dropped drastically?

FlaDude — Mon, 25 Feb 2019 22:14:19 GMT

@Anonymous wrote:

So, are you saying that I should not worry about this credit score at all? I am looking for a house and dont want anything to come as a surprise while applying for a mortgage loan.

The credit score is on my Experian statement. I registered on Experian site for an account and pulled the credit report. When I looked at the credit alerts it showed two sudden drops in Sept and Oct. Should I pull a credit report from annualcreditreport.com, but it will not give my credit score. What is the other option?

1) Yes, you do need to worry about your score.

2) Yes, you should pull your complete reports and review them in detail to make sure you don't have any lates or other surprises. You already have the score, now you need to see why it changed drastically.

Re: please help me understand why my score dropped drastically?

Anonymous — Tue, 26 Feb 2019 00:26:47 GMT

Experian’s credit monitoring is actually FICO so you should definitely find out what’s damaging your score.

The free subscription includes full access to your Experian credit report, updated monthly, but if you get the app on your phone and sign in, go to credit reports and tap Equifax or TransUnion, it will offer you a free 7-day trial of CreditWorks Premium which will pull your scores and reports from all three bureaus so you can quickly look and see what’s damaging your reports.

From the score drop numbers, it sounds like reported late payments to me.

Re: please help me understand why my score dropped drastically?

Anonymous — Tue, 26 Feb 2019 00:45:55 GMT

@Anonymous wrote:

So, are you saying that I should not worry about this credit score at all? I am looking for a house and dont want anything to come as a surprise while applying for a mortgage loan.

I was saying if it wasn't a FICO score to not worry about it. It sounds like it is in fact a FICO score, although not a mortgage score, which is what you should be most concerned with when considering an upcoming mortgage application. First thing first, don't apply for any additional credit between now and when you're going for that mortgage. No other loans, CCs, or anything. Ideally you want 12+ months of no credit-seeking going into your loan app.

Low-mid 600's scores can only happen for 1 of 2 reasons. One, very high utilization or Two, negative information present. Whatever the issue, you'll want to tackle that immediately as it can be holding your FICO scores back 100 points easily.

Re: please help me understand why my score dropped drastically?

Anonymous — Tue, 26 Feb 2019 03:48:33 GMT

@Anonymous wrote:
@Anonymous wrote:

So, are you saying that I should not worry about this credit score at all? I am looking for a house and dont want anything to come as a surprise while applying for a mortgage loan.
I was saying if it wasn't a FICO score to not worry about it. It sounds like it is in fact a FICO score, although not a mortgage score, which is what you should be most concerned with when considering an upcoming mortgage application. First thing first, don't apply for any additional credit between now and when you're going for that mortgage. No other loans, CCs, or anything. Ideally you want 12+ months of no credit-seeking going into your loan app.

Low-mid 600's scores can only happen for 1 of 2 reasons. One, very high utilization or Two, negative information present. Whatever the issue, you'll want to tackle that immediately as it can be holding your FICO scores back 100 points easily.

So I did pull all three reports. Experian - 639, Equifax - 637 and Transunion - 745. Positive under the reports- Experian and Equifax - No missed payments and low revolving credit usage and under Transunion - No missed payment, low revolving credit usage and recent credit card usage. Negatives under Experian and Equifax - Collection and/or PR, Few accounts paid on time (only two existing accounts) , loan balances, and short account history. Negatives under Transunion - Short account history and loan balance.

It doesnt make sense to me. It says loan balances - The remaining balance on your mortgage or non-mortgage installment loans is too high. How can be low when I just started a loan.

Also why the figures dropped by 63 points just after the loan started and by another 60+ points the next month.

The Collection was intially showing on Equifax. Till then my Experian score was high in 700s. I spoke to the collection agent in Oct/Nov about this collection and now it is showing on my Experian account also.

So, by looking at this my experian scored dropped only because of my car loan. What if I pay off some part of car loan as the car loan was only $6000. If I pay off around $2000 will my score improve? I am also trying to remove my medical collection which is showing on Experian and Equifax. This is all so confusing.

Re: please help me understand why my score dropped drastically?

FlaDude — Tue, 26 Feb 2019 04:29:47 GMT

@Anonymous wrote:
Low-mid 600's scores can only happen for 1 of 2 reasons. One, very high utilization or Two, negative information present. Whatever the issue, you'll want to tackle that immediately as it can be holding your FICO scores back 100 points easily.

I think the bolded part explains it, you show a collection on EQ and EX and have low scores there. No collection on TU and a high score. Your car loan does not explain a 130 point drop, a collection does. Anything you do regarding paying down the car loan is going to make minimal difference. If the collection is in error and you can dispute it away, your scores will improve considerably. If you can't get the collection removed, expect it to suppress your scores for up to 7 years. Just hope it never gets reported to TU, and try to stick with lenders that use TU.

Re: please help me understand why my score dropped drastically?

Anonymous — Tue, 26 Feb 2019 13:37:32 GMT

AM15, the issue here is a clean report verses 2 dirty reports. As you can see the collection is impacting your scores around 100 points. That's significant and needs to be addressed. Don't gve your loan any thought at all. That's not your issue here. Paying down a few thousand dollars on it likely won't raise your FICO scores even a single point. Taking a (new) installment loan from maxed out initial utilization of 100% down to 8.9% or less often results in a 25 point score gain or so if it's your only open installment loan. That's 25 points for crossing the 8.9% threshold. Some people have reported no score gains along the way and if they have, they are minimal. Basically, pay your loan no mind at all and simply focus on getting that collection off of your 2 dirty reports.