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FICO dropped hard over a month

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Anonymous
Not applicable

FICO dropped hard over a month

I had a Wells Fargo secured card with credit limit of $300. I had 780 FICO score. Then I applied for an American Express charge card (no pre-set spending limit), got approved, switched for a main use, and I didn't want to pay for the Wells Fargo annual fee anymore. I hence closed the account. My FICO dropped hard from 780 (Very Good) to 643 (Not Good). I can easily backtrack the reason, i.e. the account closure. Any good/reasonable idea on how to get back on track? I don't want to open any more unnecessary accounts that I have to pay for. I like to keep the number of accounts to minimum. If I just wait, will my credit score go back up? I've been making prompt payments for my AX card.

 

* all FICO 8 scores

17 REPLIES 17
OmarGB9
Community Leader
Super Contributor

Re: FICO dropped hard over a month

I don't think closing a small $300 limit card would cause a near 140 point hit. Are you sure nothing else changed? No collections or late payments showed up? 


Last App: 1/10/2023
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Currently rebuilding as of 04/11/2019.

Starting FICO 8 Scores:




Current FICO 8 scores:


Message 2 of 18
AllZero
Mega Contributor

Re: FICO dropped hard over a month

Agreed with the above.

 

Where are you getting your scores? What CMS Credit Monitoring Service are you using?

Message 3 of 18
Anonymous
Not applicable

Re: FICO dropped hard over a month


@AllZero wrote:

Agreed with the above.

 

Where are you getting your scores? What CMS Credit Monitoring Service are you using?


+1

Message 4 of 18
dragontears
Senior Contributor

Re: FICO dropped hard over a month


@OmarGB9 wrote:

I don't think closing a small $300 limit card would cause a near 140 point hit. Are you sure nothing else changed? No collections or late payments showed up? 


Actually I can see this. It appears that the OP went from having only 1 revolving credit card account to having no open credit card and only a open charge card making utilization (and all score factors open credit cards effect) impossible to calculate.

Message 5 of 18
donkort
Valued Contributor

Re: FICO dropped hard over a month

Agree with the above.

 

Those events shouldn't cause that much of a drop.  Closing out a card in the presence of quite a few other cards might not cause a score drop at all.  Closing a card and replacing it with another card---which is the only card in his report, wouldn't account for the 140-point drop.  Acquiring a new credit card, plus the inquiry, might ding your credit by 20 points, at most-----but that 20 points would be restored in a few months of on-time payments on that card.

 

It seems like he's getting his scores either from MYFICO, or perhaps from the Experian.com site.

 

If I'm wrong----and the 140-point was just the result of the action of closing one card and replacing it with another----I would find this to be a very severe penalty, indeed.

 

I doubt that a 643 FICO score could happen----unless his file is very young, or there's some sort of derogatory.  A 30-day late might do it

 

I would look thoroughly at your reports, OP  I hope there wasn't any identity theft.

FICO 8: EQ 810; TU 816; EX 822 as of 7/5/2022
Message 6 of 18
Anonymous
Not applicable

Re: FICO dropped hard over a month

Small changes in your number of accounts mean big changes for a thin file. I know of people with 780 scores that would get an auto loan and their fico drops 100 points. They have a thin file. One or two lines of credit. The thiner the file the faster the velocity of fico changes. Conversely when you have 12 or more, it takes a lot to move the fico score even a few points. I paid off 8k of loans and CC . my credit moved 8 points. But if I get a new CC or get 4 inquiries, my score drops 2 points.

Message 7 of 18
donkort
Valued Contributor

Re: FICO dropped hard over a month

I would bet, correspondingly, that his score recovers fast once he pays off his AMEX card on time for a few months.

FICO 8: EQ 810; TU 816; EX 822 as of 7/5/2022
Message 8 of 18
FireMedic1
Community Leader
Mega Contributor

Re: FICO dropped hard over a month

Welcome @Anonymous 

You need to open some revolvers, not charge cards. You got nailed for having no revovling credit cards. Never close cards when you have a thin file. Give Cap1 or Discover pre-quals a check and see what you can get. You'll want to work up to 3 revolvers slowly over 6-9 months and dont close them. Good Luck!


Message 9 of 18
silver_idle
Established Contributor

Re: FICO dropped hard over a month


@Anonymous wrote:

I had a Wells Fargo secured card with credit limit of $300. I had 780 FICO score. Then I applied for an American Express charge card (no pre-set spending limit), got approved, switched for a main use, and I didn't want to pay for the Wells Fargo annual fee anymore. I hence closed the account. My FICO dropped hard from 780 (Very Good) to 643 (Not Good). I can easily backtrack the reason, i.e. the account closure. Any good/reasonable idea on how to get back on track? I don't want to open any more unnecessary accounts that I have to pay for. I like to keep the number of accounts to minimum. If I just wait, will my credit score go back up? I've been making prompt payments for my AX card.

 

* all FICO 8 scores


Whats your AAoA and AooA? Assuming thats nothing bad has been reported it could just be that your AAoA could be the factor, but for such a drop it sounds credit file is still very young, and with you closing out your only revolving card for a charge card couldve been a factor in such a big drop. If nothing else bad been reported, your score should increase in about 6 to 12 months of on time payments but you do want revolving accounts reporting.

Message 10 of 18
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