Pissed, Score keeps tanking!

[alpha916]

Guys, I am serious at a completely loss at what the hell a fico score even means anymore. Today, my score just dropped to 640. At this point I don't even think I could qualify for any loan what so ever.

Look at my score history:

Over the past few months it has done nothing but tank. I have a 7 year history, ZERO late pays, EVER. Not once. And for the past few months I have done nothing but pay down a lot of debt (over 4k, almost 5k now). In fact I paid two cards down to zero and my other two have been paid down a lot. One with 9k and one with 3k.

This is the notification I got today:

I have made a post about this before on the forums and people keep saying "don't worry your score will eventually go up". Well guess what? Its not, it just keeps going down. Is this scoring system some kind of scam or something? I make almost 100k a year and have 12k debt (about 12% debt-to-income). Yet I have the score of someone with bankrupcy on their record. What the hell?

[haulingthescoreup]

Ouch!

OK, the happy little things that Scorewatch sends you as "reasons" are meaningless.

What were the negatives on screen two for your earlier score, and what are they now?

[alpha916]

Negatives from wheb my score was 662:

You have too many credit accounts with balances (5 accounts)

You've made heavy use of your available revolving credit. (70%)

You have a short credit history. (7 Years, 6 Months ago)

You opened a new credit account relatively recently.  (8 Months ago)

Now my score is 640 and absolutely nothing has changed except for my UTIL is lower (a little under 50%) and my accounts with balances should be 3 (2 credit cards, one mortgage)

[haulingthescoreup]

Oh. so you got a score alert, without pulling a new report, right? (Which makes absolute sense.)

OK, I'm scrambling here. How old is the report that you listed the negatives from? (Wow, what an awful sentence...) Is it maybe from back in January?

eta: and you do have one change; you have one fewer open account. How many open accounts do you have now, and of them, how many are revolving and how many installment?

eta part deux: and what was the CL on the now-closed card, and how much did your total CL change?

[alpha916]

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@haulingthescoreup wrote:

Oh. so you got a score alert, without pulling a new report, right? (Which makes absolute sense.)

OK, I'm scrambling here. How old is the report that you listed the negatives from? (Wow, what an awful sentence...) Is it maybe from back in January?

eta: and you do have one change; you have one fewer open account. How many open accounts do you have now, and of them, how many are revolving and how many installment?

eta part deux: and what was the CL on the now-closed card, and how much did your total CL change?

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Yes, i got a score alert without pull a report.

The report was from March 8th. I have 4 accounts open, 2 with a balance, and 1 mortgage. My credit limit is around 24k (don't know the exact number).

[haulingthescoreup]

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@alpha916 wrote:

Yes, i got a score alert without pull a report.

The report was from March 8th. I have 4 accounts open, 2 with a balance, and 1 mortgage. My credit limit is around 24k (don't know the exact number).

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I'm thinking that this is relevant. Either you had 5 accounts, with 4 being revolving + 1 mortgage, and now you have four, with 3+1, or you had 4, now down to three. I think that by closing the CC, you've significantly reduced your number of open accounts, so you're getting dinged for "too many accounts with balances" and "too many revolving accounts with balances." (I think that the second one is a factor, but I'm not positive.)

That's one of the things that happens when you don't have many open credit accounts: any change on one account can result in a big score swing. That doesn't mean that you should have a bunch of accounts if you're not comfortable with this; it just means that you should be braced for frequent changes.

In other words, if you have (for instance) 11 open accounts, of which 9 are revolving and 2 are installment, and you close one CC, your overall proportions don't change much. But going from 5 open accounts, of which 4 are revolving and 1 installment, down to 4, consisting of 3+1, and two of the three CC's report balances, you might see a big swing. I'm surprised at 20 points, I guess, but I can see it happening.

You might try having only one CC report a balance. Pay off the others right before the statement is due, so that they report $0. If you have 3 open CC's and 1 installment, that will result in 2 of 4 accounts with balances, and 1 of 3 revolving accounts with balances. That might help.

[mauve]

Here's your problem - that account was paid to $0 and closed.  That changed you utilization to 70%.  Ideal scoring: all but 1 account reporting $0 balance and the remaining account reporting less than 9%.  Utilization is 30% of your score, and I don't know how you're figuring 50%, but this is clearly stating 70%.

Oh, wait, this is old info and you've paid down your utilization?  The alert says that you closed an account with $0 balance.  Did you update your utilization calculations to include that info?  Utilization is ONLY your revolving accounts.  Paying one to $0 and closing it would kill your utilization. 

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@alpha916 wrote:

Negatives from wheb my score was 662:

You have too many credit accounts with balances (5 accounts)

You've made heavy use of your available revolving credit. (70%)

You have a short credit history. (7 Years, 6 Months ago)

You opened a new credit account relatively recently.  (8 Months ago)

Now my score is 640 and absolutely nothing has changed except for my UTIL is lower (a little under 50%) and my accounts with balances should be 3 (2 credit cards, one mortgage)

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[llecs]

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@mauve wrote:

Oh, wait, this is old info and you've paid down your utilization?  The alert says that you closed an account with $0 balance.  Did you update your utilization calculations to include that info?  Utilization is ONLY your revolving accounts.  Paying one to $0 and closing it would kill your utilization. 

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+1 if that CC reported a CL prior to PIF.

[GregB]

Closing that account seems like a big mistake. Seems you will now have to pay another account down to $0 just to get close to where you started. If you had 2 accounts out of 5 revolving accounts reporting a balance and now you have 4 revolving, the only thing that will get you LESS than half the accounts reporting a balance is 1.

[Walt_K]

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@GregB wrote:

Closing that account seems like a big mistake. Seems you will now have to pay another account down to $0 just to get close to where you started. If you had 2 accounts out of 5 revolving accounts reporting a balance and now you have 4 revolving, the only thing that will get you LESS than half the accounts reporting a balance is 1.

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I don't know that it was a big mistake.  The amount of accounts reporting balances isn't a huge ding right?  OP says 7 year perfect payment history.  Seems like the main problem is just utilization.  Losing this CL made the utilization jump up higher again.  Unclear what exact utilization is, but once that gets under control, the score will improve.