0% utilization and SCT questions

[Anonymous]

Hi everyone, I'm new here (posting, anyway) but I've been using tips I've read on these boards for a few months to try to rebuild my shattered credit. I have several questions..
I just got an alert from Experian that my score dropped 20 points. It appears my capital one account updated today as that's the only thing that's changed. Last month I PIF as I always do, but not knowing how this worked yet, I used my card again the next day so the small amount I charged between then and when they reported to the bureaus appeared on my report. My score went up by 10 points but I thought that was bc I had just gotten a new retail card via the shopping cart trick, with a higher CL than my capital one card has. But now I'm thinking it was actually bc of the small balance that was reported on the CC, bc this month I made sure not to charge anything after paying my balance down to zero and as I mentioned, my score dropped 20 points!! Is that why? And if so, why didn't the increase in overall credit help my score? I've gotten 2 more cards since then via the SCT, neither has reported yet, but I'm wondering how those will affect my score. Also, on one of the cards I bought my mom a mother's day present, using about 40% of the available credit for that card. So my next question- is utilization calculated overall, bc if so I'll still be well under 30, even under 10, and following advice I've read on this site I don't want my utilization coming from any more than one card so I'm not gonna charge anything else anywhere else for the time being, but do i need to scramble and contact comenity customer service to pay that balance down to around 10% before it reports so my TOTAL utilization will be where I want it or can I wait till I actually get the card and set up my account online as usual?
Also, since I've got a couple of cards from within the last 1-3 weeks and I want to open one more, should I do it now so they can age together? This is a store card I want to get at some point anyway; waiting wouldn't help anything since I've already got more than one from within the last 30 days, right?
Next- I want to dispute some baddies on my reports. Does anyone have any advice on how to do this, somewhere I can find a step by step process hopefully with templates for letters? I also need to dispute a bunch of inquiries that were submitted without my approval; is that a separate process? I can't afford a credit repair agency or anything, unfortunately. I'm gonna have to do all of this myself, but I'm fully prepared to do the work.
Last but not least- I was in an abusive relationship for several years and my ex used my identity to open accounts I didn't know about until after I finally got out of the situation. Idk what to do about this bc I've read that disputing things bc of fraud or putting any kind of fraud or identity theft alerts on your accounts can make creditors see u as a risk. Does anyone have any advice/info on This?

Thank u so much, u guys are amazing. Your knowledge on these subjects has helped me increase my scores by about 50 points so far!! I'm excited to finally be actually joining the community!

[Anonymous]

Hi  whodidwhatnow:

     You have a couple different factors mentioned here. First you are right that if your CC balances are all zeros then your score will drop; however, as you said you put a few bucks on the card before it reported (statement closing date) and so you actually did not have all zeros. Nevertheless, you MIGHT be correct (under certain circumstances) that your new CL could have caused your 10-point increase, not the small balance (more on this below). That assumes your old balance (on that Cap 1 card) was small the previous month as well. It is important to remember (and you may have seen this many times on the forum) that you want to keep both your total utilization and individual card utilization below 8.99% for maximization purposes.

     You said; “I made sure not to charge anything after paying my balance down to zero and as I mentioned, my score dropped 20 points!! Is that why? And if so, why didn't the increase in overall credit help my score?”  The answer to the first part is most likely correct. If all your cards were at $0.00 then you will see a point drop (assuming they were not all at zero dollars the previous month).

     As to why the CL increase did not help; that has multiple possibilities. The most probable is that you already got the increase (remember you said the previous month you saw a 10-point increase). There is another possibility. Assuming you did not use the new card, then the CL increase did not affect your overall utilization or put you into another bucket. For example; if you had one card with a $1,000 limit and zero dollars utilization, you have a 0% utilization and your score will drop from the previous month where that card had (for example) 1% utilization. Both your card and total utilization is 0%. Now you get another card with a $5,000 limit (and you don’t use it). You now have another card with $0 utilization. Your card utilizations are (0% + 0%) and your total utilization remains 0%. Nothing has changed and you most likely won’t see and increase. Of course I ignored the possible effect of an inquiry (which I will discuss a little below). The additional inquiry COULD negatively affect you or it could have no effect at all (that is a different story, but you want to consider it with respect to your 20-point drop).

     This is a very general statement, but fundamentally CL increases only help your overall utilization if you don’t move money around as I do below. Think of it like this. You have 2 cards (1 with a $500 CL and another with a $1,000 CL). You have $0 on the $500 card and $200 on the $1K card. Card Utilization equals 0% and 20%; total utilization = 13.3%. Now you get a third card with a $1K CL. Your new 3-card utilization is 0%, 20%, and 0%; BUT your total utilization is now 8% - you’ll see a score uptick for AZEO and a total utilization below 8.99%. Next you transfer your balance (be careful of transfer fees etc.) to the three cards the following way. $40 on the $500 card, $80 on the new $1K card and leave $80 on the original $1K card. Your card utilization is now 8%, 8%, and 8%; while your total utilization remains at 8% - you’ll see another bump up for the card utilization below 8.99%. In this case be careful since this only uses 3 cards. You may see a drop since you are not at AZEO or none at all. Some on the forum have stated they keep 2 or 3 cards with a small balance and have no impact (occasional I do because of overlapping reporting periods) while others have stated they do take a hit – it’s all dependent on your profile.

     The next thing you ask is “So my next question- is utilization calculated overall, bc if so I'll still be well under 30, even under 10?” Well I pretty much explained that above, the algorithms use both (individual card utilization and total card utilization). That 40% utilization (if reported) will take you from 0% (from what I understand) to 40%. Now this gets a bit tricky (and some others on the forum may answer this better than I) but you will get a boost for going above 0% but you will get a drop for the high card utilization at 40%. Whether it will work out as an overall plus or minus, depends on your total profile. But if you wish to maximize your score, I’d get that 40% down to 8% or less before it reports (if you can). Then you should see your best bump for getting off of 0% but remaining below 8.99%. 

     But you said a couple cards have not yet reported, and further implied that you also got 3 new cards. If this is true (and assuming you had none before) then the inquiries (when they report) will drop your score. Since you said you need to dispute some inquiries, I’ll assume you have several already and as such (if the total is not too many) then a few more may not drop your score at all (from where it was).

     As for your relationship and fraud, I can only say: If it is fraud, fight it; if it is legit (ex was an AU) then close the accounts, bite the financial bullet and pay it on time, and continue to march. Good Luck.

Y

[Anonymous]

Thanks for the info, I really appreciate it. Yes, i do have a lot of inquiries, but several of them were obtained without my authorization and a handful of older ones were from straight up fraud/identity theft (I'll explain that in a minute). But to clarify, the new cards I've gotten and the new one I want to get are all via the shopping cart trick, so no hard pulls at all from those. So, should I go ahead and get the last new card now while my youngest cards are already less than a month old so they can all age together and not drop me back down to 1 month at some point in the future, since I know I want this card at some point anyway? From the research I've done it seems that would be the best way to go.

For the 10 point increase, I'm wondering if it was actually the small balance reporting on my cap 1 card that caused the increase bc before last month I had always made sure my balance was PIF and nothing new was charged before it was reported to the bureaus (every month my utilization was reporting at 0%). Until last month, when I THOUGHT I had screwed up by charging a few small things after paying the balance but before cap 1 reported my utilization. So it ended up reporting at 7% utilization at the exact same time as my new store credit line reported, & I got a 10 point increase. But Idk which thing caused the increase or if if was both or..?
Then this month I made sure the cap 1 balance was PIF & I didn't charge anything afterwards so it reported at 0%, that being the only change, when I got the 20 point drop. So that has to be from my utilization going from 7 to 0. That sucks, I thought I had messed up the month before & I was going to get an increase when cap 1 reported this month. I legit cried when I got the email notification of the 20 point drop. Ugh.
So before the 2 new cards report I'm going to pay down the one at 40% to about 20% (that's all I can afford right now but that should still help right?). That would put my overall under 8%.

As for the situation with my ex (which ties into the fraud/identity theft issue I mentioned earlier), no he wasn't an AU or anything, he completely stole my info & opened a card, maxed it out, & now it's in collections. I didn't know about any of this until after I left him & started working on my credit. There are also inquiries I don't recognize from that time period so I'm guessing he applied for other things but got denied. If I hadn't started working on my credit I might not have ever known about any of this bc I've never had credit before, I had never looked into any of this stuff before bc my father used my identity & destroyed my credit before I was even of age (& before the internet existed, so it was apparently easier to do that kind of thing). That was so long ago though, it appears all the stuff from when I was a minor has just dropped off my reports, which makes sense given that was well over 7 years ago.
So if I dispute the stuff my ex did bc of identity theft, will that in and of itself make me look like more of a risk or something, to future creditors? I've read things that basically alluded to that, which is why I haven't done it yet. Also I wasn't worried about it happening again bc my ex was still in jail.. but he just got released so now I'm kind of worried. Out of fear of hurting my credit more due to what I've read about fraud and identity theft alerts, my only plan thus far was to freeze my credit so he can't try to get anything new. Thoughts?

Again, if anyone has any advice concerning letter templates and steps to take to dispute accounts and inquiries I would really appreciate that as well.

Thank you so much!!

[Anonymous]

     You asked; “So, should I go ahead and get the last new card now while my youngest cards are already less than a month old….” Wow, this is a monster question; but let me ask. You say; “I know I want this card…” Why? From your posts it is obvious you have a lot of issues (fraud, ex problems, unexplained inquiries, utilization issues, etc.).  Is this card going to help you in anyway with those problems? If not, then they will still exist and while I understand your desire to “not drop [your AAoA and AoYA] back down to 1 month at some point in the future,” your impending outcome is what you make of it.

     So once again I’m the Grinch. Look honestly at all your issues. Prioritize them as you can fix them. Don’t try to fight an ex (which may take months or years) when you can fix your utilization in days or weeks. Yes, all needs attention and nothing is more important than the rest; however, small steps are rewarding. Seeing a 5 or 10-point increase for doing something that takes a month is far better than seeing NOTHING for a year only to get a 20 or 30-point increase at that time – it’s human nature. Rebuilding takes time, and it seems you need to do that. Instant gratification is what gets many people into problems. Sure you want the 30-point increase, but why not take care of the little stuff along the way – you’ll get it eventually.

     There are tons of folks on this forum that wait years for BKs and other derogs to get off of their reports (look at the gardeners around here). In your case it seems like you have many small issues that can be fix in a relatively short FICO time. A better question would be (if I may be so bold) is to ask the forum; where should I start? “A journey of a thousand miles begins with [but] a single step.”

Y

[Anonymous]

That's what I'm trying to do, I just got more specific by asking about the dispute process. Where else would u recommend I start?
The card I want to get won't result in an inquiry, I could really use it to get my daughter a few things she really wants for her birthday, and I already have 2 other cards less than a month old anyway so why not get that one right now? I've had 1 of my store cards for 3 months and haven't even touched it (which I actually need to do soon so it doesn't get closed.. but I'm conducting research elsewhere to take care of that).
I started rebuilding 6 months ago, I'm not looking for any quick fix. Just bc this is my first time posting here doesn't mean I'm off to some hedonistic start. I mentioned in my first post that I've been a long time reader, first time poster.

Tbh, I'm getting a real cliquey vibe here.. I pretty much regret posting at all at this point. I get the feeling u just really want to condemn me for something but I really don't understand why.. what did i do wrong?

[Anonymous]

Sorry my friend and FICO fellow;

     Whodidwhatnow said; “I get the feeling [you] just really want to condemn me for something but I really don't understand why…what did I do wrong?”

     Don’t feel that way and there was no condemnation meant. The forum is like AA or NA in that we provide that which we know as laypersons from personal (or professional) experience. I personally did not intend to condemn you (if you feel that I did, I sincerely apologize). We are just a bunch of folks that have “been there and done that.” Having said that, there are tens of thousands of post on this forum. Some of us have seen things that happen on a reoccurring basis. My personal intent is/was to bring you up to that which I know from my time here.

     As I said it is like AA or NA. All folks in those groups have experienced or witnessed just about every problem a new member can mention. The same is true here. There is a lot of experience on this forum that can get into really great details (want to know about buckets or how an alert has nothing to do with a score drop); you are in the right place. I for one (and I believe most folks will agree) welcome newcomers with specific problems. However, our recommendations can only be generic since we don’t have the total data (and circumstances) needed.

     You will find all kinds of individuals with a variety of situations/problems/experience that represents the entire USA. There are no trolls and if I said something offensive to you, trust me the moderators will slap my virtual hands very hard. But what we do have is a nationwide group of individuals that have the best, combined knowledge about FICO scoring and CRA data production in the country. We are all volunteers and as such you may see us disappear for days at a time as we earn our living or get into details as we argue over semantics. However, when we respond, most of us attempt to examine the words of the OP, examine their question, go deeper into situation/problem they have, and then (as amateur psychologist and AA members) provide the best possible solutions to what we see or deem vital to the person. Sometimes, that solution is negatively received. We have no control over that and the forum in NOT a situational solution. It is only a repository of experience available to the participant.

     But the important point is, and I’m not going to sugar-coat it. We have all been there and done that, having the T-Shirt at some point in our FICO lives (some more than others). No one condemns anyone on this forum. While you may not like to hear what is said, there is never a personal evaluation of anyone. For most of us, if we did, there would be someone on the board that would quickly say “Hey Ytzak, 3-years ago you did ABC, just like him/her. How dare you say that to a new member as though you are divine.” The forum will call me (or anyone) out.

Y