FICO Experian score dropped dramatically

[Anonymous]

I have been working for 5 years to rebuild my credit after an ex-husband trashed my credit worthiness. I have a satisfied public judgment on my record (listed 4/2010, and listed as satisfied 9/2012) from a card he took out in my name and then did not pay, for which I was sued. After the divorce, I began paying all credit cards off and paying everything on time as of July 2010.

I am remarried, and we're trying to get my credit into position to allow us to build our own home (construction loan). I am aware these are not easy to qualify for.

In preparing, we sold off our other home for a profit, and paid off the car loan. When I ran simulators before paying off the car, they indicated paying off the loan a few months early would have a neutral impact on my credit.

Well that wasn't the case. My FICO Experian was hit by 24 points. On top of that, right after, my credit card balance decreased by $5 and that dropped me another 4 points...amd unfortunately below the quoted lender threshold of 660 for the loan we want to apply for. I'm now at 657.

Help, please. I feel like 28 points was a huge drop, and rather unfair. What can I do to repair some of this damage?

The problem is I have no debt right now, and I don't want to take anything else on before attempting to build.

I have an Amex with no official spending limit, and a Capital One with a $2500 spending limit.

This entire thing feels like a song and dance to me. Any suggestions? I would be very grateful.

[StartingOver10]

If you have zero balances on everything, that is why your score dropped so drastically.

Make sure a small balance reports on your cc - somewhere from 1% to 9% of its individual limit in order to get your points back.  I am assuming you are using FICO scores and not Experian scores directly from their site. For some reason FICO wants to see a small balance on one cc and not zero across the board.

You should really pull your 3B report here to get the variety of FICO scores:  FICO 08, bankcard scores, mortgage scores and auto enhanced scores. That way you know the impact of paying off your auto loan. If you read through the site, you will see that many people get a hit for the payoff of their auto loan, but gradually begin to regain those points after a month or two.

[Anonymous]

Well, I am carrying a balance. However, because my Amex has no limit, I'm not sure how to estimate my 10%. ???

I've been carrying around $100 -$300 on Amex. The $5 on my other card, the C1, came about weird...I tried to pay that card off, but somehow was $5 short. So then when I paid off that remaining $5, I got hit. But I'm still carrying a small amount in my Amex just to have something on a card.

How do I estimate how much to carry, and on which card, if Amex has no cap...?

[Anonymous]

And I will definitively look into that 3B report; thank you for the tip!

[Anonymous]

Open a small ($300-$500) secured personal loan from your bank or CU. You are losing points mostly for credit mix, because now you only have revolving credit. Also consider opening a second Capital One account. That will get you to the recommended three bank cards.

I would suggest letting only the Cap One card report a balance of around 2% of its limit, rather than the no-limit Amex.

[Anonymous]

If your score dropped 4 pts from paying off the $5 balance on the one card, then get a $5 balance back on the card to raise your score back up the 4 pts, then you are above your needed number. I would strongly advise against opening any small loans at this time if you are planning on going for a mortgage soon, because initially it would drop your score even more.

[Anonymous]

Okay, I will shift to using my Capital One to holding a small balance instead of the Amex. But how do I determine my 9% (or less) of my overall credit utilization if the Amex doesn't have a cap?

[Anonymous]

Or will I still get a boost with smaller credit utilization amounts?

[Anonymous]

It should be 9% or less of your Capital One credit limit.

[Anonymous]

Okay, got it.

Is there anything else I can do to raise my numbers?

I'm considering calling to have a medical collection account removed. It went to collections because the office entered my address wrong, and so I never received the bills! I only became aware of the collection status by viewing my credit report.

I paid the amount with the doctor's office (this was a couple years ago) and told them to have it removed from my credit report since it wasn't my fault, but lo and behold, it's still sitting there (showing as paid). :/

Do I call the doctor's office or the collection company and ask them to have it removed? And could this backfire on me on some way?