Credit Score Drop - 165 Points - Please Help

[Anonymous]

Someone, please help!

I have been working on my credit since September of 2020 and improved my score by over 180 points. I have added a lot of positive credit history while working on removing negative items. Suddenly this morning I logged into Credit Karma and it said my credit dropped 165 points on Equifax due to opening a new account. I know I have added a few cards over the months and my credit age has decreased as a result but I have a lot of on-time payments and low utilization. None of those cards dropped my score, they in fact increased my score.  How can I get a 165 point decrease from opening an account with 1% utilization? I am so stressed now after all the hard work I've put in. Does anyone know how this can happen?

[Sandman771]

First off don't sweat CK scores. 

But if you are concerned and it sounds like you should be get a copy of your report and go over it thoroughly and make sure there isn't something to sweat about. Congrats on a great job!! 

[Anonymous]

Thanks for replying but CK has been pretty reliable so far. I'm just curious about two things 1.) How can there be such a significant difference between bureaus? Mine have always been close. It's just that now CK is saying Equifax is down 165 points. Granted I do have 3 more accounts on Equifax than the other bureaus but that makes no sense because they are in good standing with low utilization. Equifax is saying my overall credit age is 5 months compared to 10 months with Transunion, for example.  I'm confused.

[Sandman771]

That is one portion of the scoring, age of accounts. If you have a shorter age, then your score will be lower. Now as to why the drop, you must have crossed some threshold that CK uses with their Vantage system that I don't understand. I would still pull a report directly from Equifax (you get one per year free anyway). 

I wasn't trying to disparage CK. I use them too to see changes as they are pretty fast, but I've seen too many times at a car dealership someone comes in with a 700 CK score and they are a 570 on FICO. 

[OmarGB9]

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@Anonymous wrote:

Thanks for replying but CK has been pretty reliable so far. I'm just curious about two things 1.) How can there be such a significant difference between bureaus? Mine have always been close. It's just that now CK is saying Equifax is down 165 points. Granted I do have 3 more accounts on Equifax than the other bureaus but that makes no sense because they are in good standing with low utilization. Equifax is saying my overall credit age is 5 months compared to 10 months with Transunion, for example.  I'm confused.

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Well the reason we say don't sweat CK scores is because they use the Vantage 3.0 scoring model, which no lenders actually use in credit decisions. Most lenders use FICO. The CK Vantage 3.0 model is highly volatile and for some reason doesn't include closed accounts in its calculations, hence the huge score differences between it and FICO 8.

[etex]

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@Sandman771 wrote:

That is one portion of the scoring, age of accounts. If you have a shorter age, then your score will be lower. Now as to why the drop, you must have crossed some threshold that CK uses with their Vantage system that I don't understand. I would still pull a report directly from Equifax (you get one per year free anyway). 

I wasn't trying to disparage CK. I use them too to see changes as they are pretty fast, but I've seen too many times at a car dealership someone comes in with a 700 CK score and they are a 570 on FICO. 

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Hi OP and @Sandman771 , 

FYI ~ One free credit report per week from the aunnualcreditreport site until April 2022.

Good luck OPwith your continued rebuild. 

[Anonymous]

This helped me. I use CK to keep up to date, however, I was able to remove a "closed" account where I was authorized removed. It was a charge off, so I thought my score might improve. 

It didn't. If Vantage doesn't score closed accounts, that makes sense.

Thanks

[Anonymous]

Thank you for your advice. I went ahead and pulled all three FICO scores and Equifax is showing a 35 score decrease not a 165 point decrease according to CK. It still makes no sense why a 35 point decrease for opening one new account with a 1% utlization. Go figure.

[RSX]

hi

the 35pt drop is a combo of the following 

1. New Inquiry

2. New account

3. Drop in Average Age

4. Age of newest account

so a new account can have a Large impact on younger files

the first 2 items will lessen in impact over the next year - especially after 6 months

the 3rd and 4th items will get better each month

since you only have a 10 month average (now 5 months) a new account will have that 35 point impact

once you have over 2-3 years average, it will be a different situation

[Anonymous]

Thank you. That is great information to have.

I want to correct one thing though - CK said my age was 10 months and dropped it down to 5 months because of the new account. When I pulled my Experian FICO it was 1.9 years with my oldest account around 9 years.  Someone told me that CK only goes back 2 years. Could this be why the age is showing on CK so low?