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Balance decreased and FICO score also decreased

Your FICO® Scores can impact your loan interest rates, terms, approvals and more.
Valued Member

Balance decreased and FICO score also decreased

Hi. I paid my balance down on my Lane Bryant and New York and Company card. My balance is about $50 less than the balance that reported last month. My score shows that it went down 1 point. I know that’s not much but I didn’t expect it to drop at all.
Message 1 of 8
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Valued Contributor

Re: Balance decreased and FICO score also decreased

This is common. What is your combined total utilization across all your cards? If it's too low that can cause score drops. But if it helps you keep yourself from overspending I'd say lower is better than having cards above ~30%. Don't fret the small points though. Just let them go up and down.

"Show your thanks with action! Hit the "Kudos" button (the stripe with the star) for every post you find helpful to show your appreciation to the community of great individuals who help you on these forums" -Me
Message 2 of 8
Contributor

Re: Balance decreased and FICO score also decreased

Hmm, do you have any other accounts? Also, where do you receive your credit scores? Fico Scores are known for having "false positives"... in which, for example, you receive a score drop and an associated change in your credit score, but the two may not necessarily be connected. I've noticed this a lot with MyFico. It's quite possible that your balance did drop, but that's not why your score fell. 

 

Like the above person mentioned, having all revolving accounts report a zero balance can lead to a score drop - but I've only seen that happen with zero balances, not low balances. Did you happen to receive any hard inquiries recently? 

Message 3 of 8
Valued Contributor

Re: Balance decreased and FICO score also decreased


@SHJ wrote:

Hmm, do you have any other accounts? Also, where do you receive your credit scores? Fico Scores are known for having "false positives"... in which, for example, you receive a score drop and an associated change in your credit score, but the two may not necessarily be connected. I've noticed this a lot with MyFico. It's quite possible that your balance did drop, but that's not why your score fell. 

 

Like the above person mentioned, having all revolving accounts report a zero balance can lead to a score drop - but I've only seen that happen with zero balances, not low balances. Did you happen to receive any hard inquiries recently? 


Good point asking for a source of scores. I know Credit Karma drops it's vantage score of your profile if you have a 0 percentage, rather than 0 balance.

"Show your thanks with action! Hit the "Kudos" button (the stripe with the star) for every post you find helpful to show your appreciation to the community of great individuals who help you on these forums" -Me
Message 4 of 8
Valued Member

Re: Balance decreased and FICO score also decreased

Hi. Thank you for responding. No inquiries lately. Check this out. I have a Navy Federal card with a $10k limit. My balance is $9,654. In Credit Karma is says that my score will drop over 20 points if I lower my balance to 9k. I don’t understand why my score would drop if I lower it by $654. Do you know why that would happen? I’m trying to raise my score by paying my balances down but now I’m scared. Any advice would be greatly appreciated.
Message 5 of 8
Valued Contributor

Re: Balance decreased and FICO score also decreased

You’re looking at a VantageScore, not a FICO score. It’s meaningless and used by essentially no one, so don’t sweat it. FICO scores will only drop from paying down balances if you pay off every single card you have and have zero revolving debt. Long as you don’t pay off every card you have, your important scores will never drop from paying debt.


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Message 6 of 8
Valued Contributor

Re: Balance decreased and FICO score also decreased

Credit Karma is great for watching your reports but its scores mean exactly nothing and should be completely and aggressively ignored.


Amex Gold | Amex BCP | Amex Delta Skymiles Gold | Amex Hilton Honors Ascend | Amex Hilton Honors | Discover IT | Target | VS | Home Depot | Lowes | Firestone | CapOne QuickSilver | Wayfair | Kohl’s

Heir apparent to the AJC Special (finally got a Disco CLI of $300)





Entering the garden 5/27/2019, staying until 2020
Message 7 of 8
Contributor

Re: Balance decreased and FICO score also decreased

 


@Kimboo wrote:
Hi. Thank you for responding. No inquiries lately. Check this out. I have a Navy Federal card with a $10k limit. My balance is $9,654. In Credit Karma is says that my score will drop over 20 points if I lower my balance to 9k. I don’t understand why my score would drop if I lower it by $654. Do you know why that would happen? I’m trying to raise my score by paying my balances down but now I’m scared. Any advice would be greatly appreciated.

I might be able to explain that. The card has $9,654 on it, but is that balance reflected on CK? As in, has having that high of a utilization already hurt your score? If it hasn't, then that is what CK is suggesting will happen - it will update from whatever it was before to that new balance and start to hurt your score. Alternatively, the simulator also takes into account a number of things, not just what you entered. For example, if an inquiry will age to a year next month, and you ask the simulator what would happen if you decreased your utilization from 3% to 2% next month, it will probably tell you that your score will go up - but that's not because you dropped your utilization, it's because that inquiry aged. The simulator will account for that and other things, even if you ask it about balances specifically. That being the case, it's also possible that your score will drop next month, but it's not because you paid down your balance! Strange, I know. 

 

That being said, score simulators are just that: simulations. They may or may not be correct. Nevertheless, it is never a bad idea to pay down your balance, as long as you aren't paying it down to zero. 

 

Like was mentioned before, ultimately Vantagescores aren't really used by anyone, so they don't really matter. I also use CK, but that's only for monitoring information on my CR - I disregard the scores entirely. 

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