Paid Off Credit Card - Score Decreased 10 Points!

[JohnIsHere]

Yeah, sure, I happen to know a little bit about how the credit scoring models work.  But, here's a funky story for you.

So, Experian score was 769.  I applied for an Amex Business card, and Experian took off 8 points for that hard inquiry (yes, I was approved for the Amex card), bringing my score down to 761.  Fast forward about a month:  I'm an authorized user on someone else's card, and there was $4K balance on that card - and that $4K brought 'my' utilization up to 9% (it's usually around 0% to 1%).

So, I convinced her to pay off that $4K on that card which we did (but did NOT close the card account).  Just one day after that billing cycle closed here's what showed up on my Experian:

Account balances: DECREASED by $4,000, down to $200

Utilization: Dropped 9 points, from 9% to 0%

Score: DECREASED 10 points, from 761 to 751.
I clicked on "What's Changed" in my Experian account, and here's the reason Experian gave for my decrease of 10 points:

"The balance of 1 account increased.  Amount of increase:  $9"

That's it.  Nothing else listed, because there were NO other changes with any of my accounts.  No balance increases (I only carry a balance on 2 out of 5 cards in any given month, and every month my total reported balance across those 2 cards is in the same range of $50 to $150).  Even 'IF" Experian was not including the authorized user card as part of my score, that "$9" increase in NO WAY should account for a 10 point drop.

[MEANWHILE, paying off that $4K gave me a +5 point boost on both Transunion and Equifax, from 801 to 806, and 806 to 811 respectively.]

#IamSoDoneWithTheseClowns

[SouthJamaica]

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@JohnIsHere wrote:

Yeah, sure, I happen to know a little bit about how the credit scoring models work.  But, here's a funky story for you.

So, Experian score was 769.  I applied for an Amex Business card, and Experian took off 8 points for that hard inquiry (yes, I was approved for the Amex card), bringing my score down to 761.  Fast forward about a month:  I'm an authorized user on someone else's card, and there was $4K balance on that card - and that $4K brought 'my' utilization up to 9% (it's usually around 0% to 1%).

So, I convinced her to pay off that $4K on that card which we did (but did NOT close the card account).  Just one day after that billing cycle closed here's what showed up on my Experian:

Account balances: DECREASED by $4,000, down to $200

Utilization: Dropped 9 points, from 9% to 0%

Score: DECREASED 10 points, from 761 to 751.
I clicked on "What's Changed" in my Experian account, and here's the reason Experian gave for my decrease of 10 points:

"The balance of 1 account increased.  Amount of increase:  $9"

That's it.  Nothing else listed, because there were NO other changes with any of my accounts.  No balance increases (I only carry a balance on 2 out of 5 cards in any given month, and every month my total reported balance across those 2 cards is in the same range of $50 to $150).  Even 'IF" Experian was not including the authorized user card as part of my score, that "$9" increase in NO WAY should account for a 10 point drop.

[MEANWHILE, paying off that $4K gave me a +5 point boost on both Transunion and Equifax, from 801 to 806, and 806 to 811 respectively.]

#IamSoDoneWithTheseClowns

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1.  Welcome to the forum.

2.  The $9 increase did not cause all, or any part of, the 10 point drop.

3.  If the primary cardholder on your AU card had all zero balances reporting, that could have cost you points with the 'AU all zero penalty'.

4.  From where are you getting  your TU and EQ scores?

[JohnIsHere]

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1.  Welcome to the forum.

2.  The $9 increase did not cause all, or any part of, the 10 point drop.

3.  If the primary cardholder on your AU card had all zero balances reporting, that could have cost you points with the 'AU all zero penalty'.

4.  From where are you getting  your TU and EQ scores?

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No, the primary cardholder on my AU card does not have all zero balances.  She has roughly 4 cards, 2 of the others currently reporting a balance in the $600 (20% of CL) range.  Ironically, as it turns out although we paid the "Current balance in full" on her card 3 days before the end of her billing cycle, another automatic payment was charged to the card before the billing cycle closed.  So, her card still ended not havinga zero balance (about $70 reported as a balance).  As stated, my own cards carry small balances on 2 out of 5 of my cards.  Getting my TU and EQ scores from Experian (Creditworks).  Thanks for the feedback.

[DONZI]

If Creditworks is anything like the myFICO alerts that accompany score changes, they are funky sometimes.

Your scores, if FICO version 8, are great. EX will come back around most likely since it appears your handling the cards great too.

Is there a reason you have an AU card?

[FireMedic1]

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@JohnIsHere wrote:

Yeah, sure, I happen to know a little bit about how the credit scoring models work.  But, here's a funky story for you.

So, Experian score was 769.  I applied for an Amex Business card, and Experian took off 8 points for that hard inquiry (yes, I was approved for the Amex card), bringing my score down to 761.  Fast forward about a month:  I'm an authorized user on someone else's card, and there was $4K balance on that card - and that $4K brought 'my' utilization up to 9% (it's usually around 0% to 1%).

So, I convinced her to pay off that $4K on that card which we did (but did NOT close the card account.Open or closed doesnt change a score. Age still counts either way.).  Just one day after that billing cycle closed here's what showed up on my Experian:

Account balances: DECREASED by $4,000, down to $200

Utilization: Dropped 9 points, from 9% to 0%

Score: DECREASED 10 points, from 761 to 751.
I clicked on "What's Changed" in my Experian account, and here's the reason Experian gave for my decrease of 10 points:

"The balance of 1 account increased.  Amount of increase:  $9"

That's it.  Nothing else listed, because there were NO other changes with any of my accounts.  No balance increases (I only carry a balance on 2 out of 5 cards in any given month, and every month my total reported balance across those 2 cards is in the same range of $50 to $150).  Even 'IF" Experian was not including the authorized user card as part of my score, that "$9" increase in NO WAY should account for a 10 point drop.

[MEANWHILE, paying off that $4K gave me a +5 point boost on both Transunion and Equifax, from 801 to 806, and 806 to 811 respectively.]

#IamSoDoneWithTheseClowns

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Without knowing full file. Applied for AMEX. HP. Plus dropping down to 0%. New account hit the report. W/O knowing your AAoA's. That dropped. Newest account resets to 0. Add them all up. 10 pts. Which isnt much after a new account.

[JohnIsHere]

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@DONZI wrote:

Is there a reason you have an AU card?

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I added the AU card because I just recently (in 2020) started building my credit - so, my OLDEST credit card dates only back to Jun 2020.  When, about a month or 2 ago, I added the AU card (card has 17 years of credit history; was opened in 2005), my EX score gained roughly 15 or 20 points, and my TU gained +35 points (EQ gained roughly the same, about 25 or so points).  Before 2020, I had ZERO credit.... And when I say "zero" I mean I had zero accounts, zero loans, zero credit score - all of my old, old accounts had aged off of my credit reports back around 2014 I think.  I didn't have any accounts, so none of the 3 bureaus would/could even generate a credit score for me.

[JohnIsHere]

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@FireMedic1 wrote:

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Without knowing full file. Applied for AMEX. HP. Plus dropping down to 0%. New account hit the report. W/O knowing your AAoA's. That dropped. Newest account resets to 0. Add them all up. 10 pts. Which isnt much after a new account.

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Business cards typically don't report to your personal credit (even if you are a personal guarantor for the card).  In my case, the Amex business card is not reporting to my personal credit file.  If you don't have enough business credit established, the card issuer will pull your personal credit report to determine whether they'll approve you, and you will get dinged for the hard inquiry... as happened in my situation I got dinged for -8 points.  So, no, a new account did not show up on my personal report or affect my AAoAs.  [see update below].

[JohnIsHere]

UPDATE:  It looks like here's what happened:  I (we) did not intend to pay the AU card completely down to zero - I left $50 or so bucks on it so as to not get dinged with the AU zero penalty.  HOWEVER, that $50 was a pending charge that did not get posted to the account before the billing cycle closed. So, the AU card did report $0 and I got dinged with the AU zero balance penalty.

So, here's what happened:

On the 15th the billing cycle closed and the card reported a $0 balance on the 16th and my score dropped -10 points to 751.

Apparently (??) on the 17th the same card reported to the bureau that $43 charge that I referred to.

But, Experian did not update my score until today the 26th (??).  Experian now put my score at 767, up from that 751 that I had for the past 10 days.

I'm still done dancing for these puppet masters just for the privilege of getting these "good boy" points. I've been getting by all these years by paying cash and never using credit.  I might just go back to that method - even if I have to pay cash for the next house.

[DONZI]

@JohnIsHere 

I was in a similar situation, cash for a long time.. the only things that kept my report alive was a spontaneous application for paypal credit in 2014 and a closed sears card from 1988 which at the time still was on EX and EQ.

Cash for some things is still probably the best way, but your scores are good and just using the cards for/how you want will have value as time goes on. IMO, no reason to worry about it, hassle with AZEO or try and rush things without a practical reason.

I rushed the amex plat since I had a trip coming up in a few days. Worked out well.

Into my 3rd year now, basically just using the cards as reward tools. I think that I could get some CLI or new cards but I don't really need either right now.

Bottom line, the cards have some nice value/benefits and are there for the taking. Don't take, don't get.

[FireMedic1]

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@JohnIsHere wrote:

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@FireMedic1 wrote:

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Without knowing full file. Applied for AMEX. HP. Plus dropping down to 0%. New account hit the report. W/O knowing your AAoA's. That dropped. Newest account resets to 0. Add them all up. 10 pts. Which isnt much after a new account.

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Business cards typically don't report to your personal credit (even if you are a personal guarantor for the card).  In my case, the Amex business card is not reporting to my personal credit file.  If you don't have enough business credit established, the card issuer will pull your personal credit report to determine whether they'll approve you, and you will get dinged for the hard inquiry... as happened in my situation I got dinged for -8 points.  So, no, a new account did not show up on my personal report or affect my AAoAs.  [see update below].

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The main focus was on your 10 pt loss as the title stated. Thanks for the refresher though.