Low Utilization - Credit Score Drop

[Anonymous]

I'm working on rebuilding my credit and have two secured credit cards and any unpaid debts are scheduled to drop off by year's end.

Today I received an alert and my TransUnion credit score dropped twelve points and it stated my total credit card balance. I presume this was the reason for the alert but doing the math I'm at 19% utitlization rate and have never gone above 25%.

Nothing else was stated in the alert and only TransUnion changed. This was a huge drop and I thought my utilization was in line for a bump not a big drop. Now I'm nervous waitng for the other bureaus to follow suit. My payments have always been on time with these two cards and I have no other active credit.

I'm wondering if filing a dispute would do more damage?

[Gunnar419]

Sorry that happened to you, but the first thing to know is that there's nothing (in what you described) that you can dispute.

A couple of things that might be going on. The alert text doesn't always describe the reason for the score move. Crazy, but that's how it works. Is there any possibility that something new happened on your credit reports that just didn't get mentioned in the alert?

Another possibility is that you got "rebucketed." That's a complex concept, but think of it as being graded on a curve. If your utilization just dropped under a certain point or your accounts just aged beyond a certain point or whatever (nobody really knows all the criteria), you might now be in a "bucket" with higher scoring people. When this happens, you may get an initial score drop but you'll have more potential for your score going up.

Clear as mud, I know. But unless you're about to apply for a  mortgage or make some other big credit move, this is a small drop that won't hurt you in the long run. If you're worried about it, pull your reports and make sure no little negative has appeared anywhere.

[Anonymous]

Thank you for the quick and helpful reply. I'm going to review my reports again to see if something else beyond what the alert mentions is occurring per your advice.

I'm looking at a VA mortage sometime in 2016 after I have longer-term payment history with the secure cards and several accounts drop off. I need a minimum of 620 but other issues may be in the mix so getting that score closer to 700 is important to me. I wont' apply until I'm sure I have the relevant issues at hand.

[Gunnar419]

Good for you for keeping on top of your credit and thinking ahead. It sounds like you're going to be fine when the time comes.

[Anonymous]

OK, now Equifax dropped my Score 12 points and the explanation was my $24.95 charge on a card with zero balance. All cards total 19% utilization. Something stinks, there is no way a legimate score drops me 12 points for a small charge which was my sign up to MY FICO one week ago.

When you're trying to raise your score and it's a very slow process 12 points is huge in either direction. I'm starting to question the viability of this site and if its worth the money. Over the months, carefully paying my balances off, never charging too much my scores have only risen. These were other scores, not FICO 8 such as Vantage Score at Credit Karma and scores provided by credit card companies. These scores are not used by lenders but they never nose-dived like this.

Saying I've become skeptical and angry would be an understatement. Nothing could have been added to my CRs as there has not been any hard inquires, no new collections, no heavy charging, no late payments, nothing has changed.

[Gunnar419]

---

@Anonymous wrote:

OK, now Equifax dropped my Score 12 points and the explanation was my $24.95 charge on a card with zero balance. All cards total 19% utilization. Something stinks, there is no way a legimate score drops me 12 points for a small charge which was my sign up to MY FICO one week ago.

---

Okay, that explains it. A card reporting a balance after being at zero for a while will often cause a drop in that range. Yes, it's petty and dumb, but it's the way the scoring game is played. The good news is that once you pay that card off, you'll probably regain all those points and perhaps even another point or two.

Please don't let yourself get angry over this. Yes it's frustrating when you're trying to build your credit, but this is a small thing. It barely qualifies as a bump in your road. Keep putting your energy into the good habits you're building and the plans you're making. Shake your head about this but then move on for your own peace of mind.

[Anonymous]

Thanks and Stay Tuned. When I pay that balance and the score changes I'll report back.

BTW: My husband is running his cards parallel and he had the same charge to his card with no score change. Go Figure!

[takeshi74]

---

@Anonymous wrote:

Nothing else was stated in the alert and only TransUnion changed.

---

As always, do not rely solely on alerts to determine the cause(s) of a scoring change.  You have to carefully review reports before and after the change.

Only certain activity triggers alerts while all sort of activity will impact score.

---

@Anonymous wrote:

This was a huge drop and I thought my utilization was in line for a bump not a big drop.

---

What was your prior reported utilization?  Did your utilization go up or down?

---

@Anonymous wrote:

I'm wondering if filing a dispute would do more damage?

---

What information on your reports would you dispute?

---

@Anonymous wrote:

OK, now Equifax dropped my Score 12 points and the explanation was my $24.95 charge on a card with zero balance. All cards total 19% utilization. Something stinks, there is no way a legimate score drops me 12 points for a small charge which was my sign up to MY FICO one week ago.

---

There is definitely a way and it is typical.  You have an unused revolver that is now active and that can cause such a hit.

---

@Anonymous wrote:

I'm starting to question the viability of this site and if its worth the money. Over the months, carefully paying my balances off, never charging too much my scores have only risen. These were other scores, not FICO 8 such as Vantage Score at Credit Karma and scores provided by credit card companies. These scores are not used by lenders but they never nose-dived like this.

---

Worth is always highly subjective regardless of topic.  It's your call to make.  I personally don't find obsessing over specific numbers worthwhile.  I will periodically check my scores but I find it more useful to focus on the data in my reports versus worrying overy why a given scoring model may have gone up or down by a few points every time the score changes.  I understand you're working on rebuilding and 12 points seems significant but it is really a small number of points in grand scheme.  If the cause is utilization it is definitely not worth so much worry as you can adjust your reported utilization next month and your score will adjust accordingly.

Keep in mind that many mortgage lenders don't use FICO 8 scores anyway, though myFICO is now offering some additional FICO's that may be relevant.

You might like how VantageScore behaves but it's irrelevant unless you know a creditor uses the score.

---

@Anonymous wrote:

Nothing could have been added to my CRs as there has not been any hard inquires, no new collections, no heavy charging, no late payments, nothing has changed.

---

Changes are not just additions.  Again, carefully review reports before and after the score change.

I know it's frustrating when you don't understand but you just have to put in the time and effort to educate yourself and adjust your expectations.

---

@Anonymous wrote:

BTW: My husband is running his cards parallel and he had the same charge to his card with no score change. Go Figure!

---

It's never just about the change itself but one's credit and how the change factors in.  Unless your credit is identical you have be very careful with your comparisons.  A change of X can have differing impacts on different profiles.

[kuku4koco]

I know EXACTLY how you feel... my score just took a nose-dive today!! Down by 6 pts because I paid off a $655 balance on a card (lump sum)... UGH!!! 

[Anonymous]

I'm sort of in the same position, I have a 570 CS, I got approved for the First Progress CC, I have a limit of $300 (Secured Card). My first months balance was $42, I paid it before the statement even came in the mail. I checked my CS after it was repored and it dropped 16 points!? I don't understand it as my util was around 14% (which I was told was good) but my score still dropped even though it was paid in full. This is my 2nd month having the card, but I don't want to continue to use it as I'm trying to build credit not make it worse.