FICO Score Drop

[Anonymous]

I just had Washington Mutual cancel my card because it had not been used in the last 12 months. As a result my FICO score dropped 22 points. Can they do that? What if all the credit card companies decided to cancel our credit lines due to inactivity, what kind od drop would we see then. All the advice columns tell us NOT to close credit card accounts because it will have an adverse effect on our scores based on the available credit to debt ratio and lo and behold the same thing happens when the credit card company decides to close it on their own. Anyone else experienced this? 

[haulingthescoreup]

Sorry to hear this, and welcome to the forums.

There's a lot of this going on, both CLD (credit limit decreases) and outright cancellations.

Many banks are in serious, serious cash problems, and they are reducing credit that they have extended so that they can get some more money back on their books. It happens to people with shaky credit and to people with great credit.

Do some reading here, especially on the Credit Cards boards, and you'll get a feel for the scope of the whole problem.

[wmarat]

---

@Anonymous wrote:
I just had Washington Mutual cancel my card because it had not been used in the last 12 months. As a result my FICO score dropped 22 points. Can they do that? Of course they can. What if all the credit card companies decided to cancel our credit lines due to inactivity, what kind od drop would we see then. All the advice columns tell us NOT to close credit card accounts because it will have an adverse effect on our scores based on the available credit to debt ratio and lo and behold the same thing happens when the credit card company decides to close it on their own. Anyone else experienced this? 

---

I have 8 closed accounts and my score has never dropped 22 points. Closing account has no adverse effect on score, only utilzation has. If your utilization has changed due to account closing, then your score drops.

Just my opinion.

[Anonymous]

I am beginning to think that I need to treat my FICO score like my 401K and not watch it. I have started to use cards that I usually do not use due to fear of below mentioned cancellations, which DO have a negative impact on overall scores. But here is the catch 22: by using a few cards I rarely use...emergency cards...and paying them off in 2-3 weeks, before interest can accrue,  I have noticed my score dropping. And the card companies are reporting increased use/new balance 3 weeks after I paid them off. My score dropped...since November: 23pts, then 11 points, and now 5 more today. The balances are all incorrect, not showing that they have been paid off or paid down. So I have gone from 680 in October to 650 !!! OUCH! Payments are on time, no wild purchases, and ratios way out of touch from my current balances. I have a high balance on one for the 0% balance transfer I used in August, and the others I rotate using and pay off. I am thinking there is nothing I can do at this point but to ride it out.

[WhirledPeasPlease]

---

bail97 wrote:
I am beginning to think that I need to treat my FICO score like my 401K and not watch it. I have started to use cards that I usually do not use due to fear of below mentioned cancellations, which DO have a negative impact on overall scores. But here is the catch 22: by using a few cards I rarely use...emergency cards...and paying them off in 2-3 weeks, before interest can accrue,  I have noticed my score dropping. And the card companies are reporting increased use/new balance 3 weeks after I paid them off. My score dropped...since November: 23pts, then 11 points, and now 5 more today. The balances are all incorrect, not showing that they have been paid off or paid down. So I have gone from 680 in October to 650 !!! OUCH! Payments are on time, no wild purchases, and ratios way out of touch from my current balances. I have a high balance on one for the 0% balance transfer I used in August, and the others I rotate using and pay off. I am thinking there is nothing I can do at this point but to ride it out.

---

To avoid this you need to let fewer than half of all of your accts report a balance.  The key to doing this is to pay before the statement drops, which is normally much earlier than the due date. 

Your high util on your BT card can cause a significant score drop depending on your overall credit picture.

Are you using real Fico scores and not Fakos?

And btw, welcome to the fora.  There are a few stickied threads at the top of the CC forum which may help to sort some of this info out for you.

[Anonymous]

---

@Anonymous wrote:
I am beginning to think that I need to treat my FICO score like my 401K and not watch it. I have started to use cards that I usually do not use due to fear of below mentioned cancellations, which DO have a negative impact on overall scores. But here is the catch 22: by using a few cards I rarely use...emergency cards...and paying them off in 2-3 weeks, before interest can accrue,  I have noticed my score dropping. And the card companies are reporting increased use/new balance 3 weeks after I paid them off. My score dropped...since November: 23pts, then 11 points, and now 5 more today. The balances are all incorrect, not showing that they have been paid off or paid down. So I have gone from 680 in October to 650 !!! OUCH! Payments are on time, no wild purchases, and ratios way out of touch from my current balances. I have a high balance on one for the 0% balance transfer I used in August, and the others I rotate using and pay off. I am thinking there is nothing I can do at this point but to ride it out.

---

For most cards, you need to pay them off prior to the statement cutting, not prior to the due date.  If you let a balance report on the statement, in most cases they will report that balance and if you have more balances reporting than not you will see a drop.  Additionally your utilization will go up and depending on where you are with that, you can see a drop for that.  

While I don't know the affect on my credit score, because as you can see I only check it every 3-4 months, I know that when I have used cards I hadn't used in over a year I recieved a positive notation for making recent use of credit.  I also know that when I had too many accounts reporting a balance I received a negative notation for too many accounts with balances reporting.  

[jaysdad2k]

Do you know the statement cutoff dates of all your cards? Except notably for most HSBC cards (which report the balance on the last day of the month) the cutoff date is always within a day or two each month. So, using the card after the cutoff date, and then PIF'ing before the cutoff date shows usage, but no balance.

Don't use the card just before the cutoff date, or you can't PIF it fast enough. I did that in July with Amex Gold and it was almost 3 months before all 3 CRA's went back to reporting a 0 balance.

When I joined the forum back in Feb 2008, I had small reporting balances on everything. When I started letting only one card report a balance, my scores went up 30-40 points.

Gee, we all jumped on this one didn't we?

Message Edited by jaysdad2k on 12-07-2008 01:40 PM

[wmarat]

---

@WhirledPeasPlease wrote:

---

@Anonymous wrote:
I am beginning to think that I need to treat my FICO score like my 401K and not watch it. I have started to use cards that I usually do not use due to fear of below mentioned cancellations, which DO have a negative impact on overall scores. But here is the catch 22: by using a few cards I rarely use...emergency cards...and paying them off in 2-3 weeks, before interest can accrue,  I have noticed my score dropping. And the card companies are reporting increased use/new balance 3 weeks after I paid them off. My score dropped...since November: 23pts, then 11 points, and now 5 more today. The balances are all incorrect, not showing that they have been paid off or paid down. So I have gone from 680 in October to 650 !!! OUCH! Payments are on time, no wild purchases, and ratios way out of touch from my current balances. I have a high balance on one for the 0% balance transfer I used in August, and the others I rotate using and pay off. I am thinking there is nothing I can do at this point but to ride it out.

---

To avoid this you need to let fewer than half of all of your accts report a balance.  The key to doing this is to pay before the statement drops, which is normally much earlier than the due date. 

I do not think that this consept is an accurate one. Sometimes when 1 out of 16 mine credit cards reports balance, I got FICO decrease (2-3 points), but sometimes I got FICO  increase, the same 2-3 points.

Your high util on your BT card can cause a significant score drop depending on your overall credit picture.

I have recently made BT. $6000 on $18000 card. 33% util on this card and 5% overall revolving util. FICO went up 7 points.

Are you using real Fico scores and not Fakos?

And btw, welcome to the fora.  There are a few stickied threads at the top of the CC forum which may help to sort some of this info out for you.

---

[ma_fico]

I just lost 3 pts for letting a 6th card report a balance.  I have 19 open accts.  6 seems to be the magic number for me - that's where I start losing points. 

[jmbfl]

---

@ma_fico wrote:
I just lost 3 pts for letting a 6th card report a balance.  I have 19 open accts.  6 seems to be the magic number for me - that's where I start losing points. 

---

Do you have installment TL's? They count too, and differently from revolving lines. In order to assess UTIL we need to know 1) how many total revolving TL's, 2) how many revolving TL's reporting a balance and 3) how many installment TL's (mortgages, auto loans, boat loans, student loans, etc. - all installment loans report a balance until they are paid off and when they are paid off they are closed.)