Large Purchase Trashed my FICO Scores...

[KeithW]

This March, I purchased a new bed, and a new piece of jewelry for my wife, both of which together cost around $10K. Both were put on new credit accounts, with 0% financing. I just finished paying off both of these accounts, and have noticed that my FICO numbers still have not recovered to where they were before the purchases. They droped about 50 points and have recovered about 25 points.

While I could understand an initial hit, why would this have caused such a lasting hit to my credit?

The credit agencies say that the main things holding my score down are making high use of available credit, was up to 60%, but quickly paid down to 40%, and that I have too many new credit accounts. I currently have 16 accounts reporting, and they have a perfect payment record for the past 5 years. Prior to that I had a 30 day late and a 60 day late on a single card, and two medical collections, that were quickly paid in full.

You would think that my 17 year payment history would mean more. When I buy cars, it seems they use a slightly different score, and the dealers approve my loan without even asking for proof of income or employment. They said my vehicle payment history was very good.

[LShawn08]

I believe your utilization its just a bit to high. Maybe aiming for a UTI of 20% will make for better results.

[KeithW]

My utilization is still showing around 55% as the cards haven't updated since I paid them down to 40%. I just would think that my great payment history would offset a short term bump in utilization. Guess not though.

[lhcole77]

Payment history = 35% of FICO score

Utlization = 30% of FICO score

[KeithW]

I had heard the percentages, but also heard that the 30% figure was a little misleading. Something about the 30% being utilization and something else combined.

I had also read an article recently about how some guy who had an 800+ FICO score had maxed out his cards, and it only dropped his score slightly. The point they were making, was that there were other factors which could offset a large utilization.

[MT936]

Utilization has a huge impact on your score it should go back up rather quickly if you lower the utilization to under 10%

[cluelessoregonguy]

Maxing out one card doesn't seem to hurt that bad at all if overall util is still low. Having maxed out cards with high overall util is huge though. I accidently let a card report at 85% util and drag overall util up and it nuked me until I can get things fixed on next statement.

[lg8302ch]

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@cluelessoregonguy wrote:

Maxing out one card doesn't seem to hurt that bad at all if overall util is still low. Having maxed out cards with high overall util is huge though. I accidently let a card report at 85% util and drag overall util up and it nuked me until I can get things fixed on next statement.

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That is also my experience. I had Discover at 90% and overall util of 5% and score did not change at all. But what you also do not need to forget is the cut of the AAoA with a new account.  I did cut my AAoA from 18yrs to 6yrs and still was able to cross the 800 barrier but by adding the latest two accounts my AAoA is down to 4yrs and there is no way to get across the 800 fico scores. This could also be an explanation to why your scores do not fully recover. I know this is the reason on my profile.... Garden time now

[SunriseEarth]

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@KeithW wrote:

This March, I purchased a new bed, and a new piece of jewelry for my wife, both of which together cost around $10K. Both were put on new credit accounts, with 0% financing. I just finished paying off both of these accounts, and have noticed that my FICO numbers still have not recovered to where they were before the purchases. They droped about 50 points and have recovered about 25 points.

While I could understand an initial hit, why would this have caused such a lasting hit to my credit?

The credit agencies say that the main things holding my score down are making high use of available credit, was up to 60%, but quickly paid down to 40%, and that I have too many new credit accounts. I currently have 16 accounts reporting, and they have a perfect payment record for the past 5 years. Prior to that I had a 30 day late and a 60 day late on a single card, and two medical collections, that were quickly paid in full.

You would think that my 17 year payment history would mean more. When I buy cars, it seems they use a slightly different score, and the dealers approve my loan without even asking for proof of income or employment. They said my vehicle payment history was very good.

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Yep.  You killed your AAoA, mostlikely.   Also, if you took HPs to get the new accounts, that'll get the scores to dip, too.  

[gen-specific]

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@KeithW wrote:

I had heard the percentages, but also heard that the 30% figure was a little misleading. Something about the 30% being utilization and something else combined.

I had also read an article recently about how some guy who had an 800+ FICO score had maxed out his cards, and it only dropped his score slightly. The point they were making, was that there were other factors which could offset a large utilization.

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my understanding is that it is overall utilization as well as utilization of individual lines