CREDIT SCORE DROPPED. I DONT UNDERSTAND FICO SCORING!

[Anonymous]

Hello everyone. Im in need of advice. I am 3 weeks new to the forums and absolutely love them! For the last 6 months i have been addicted to learning everything i can about credit. In the beginning, i was using CK and i watched my scores slowly go up from 595's to 703's. I have been doing the right things and was being rewarded it felt like. About a month ago, i signed up for MyFico to know my true scores bc i started understand CK means *nothing*. All 3 Ficos were around 635 and for the last 4 weeks one of the bureau's is slowly decreasing for alerts that have been on my credit reports for 6 years. Theyre not new at all. 2 medical collections that fall off in December 2018.(1 for $711) ( 1 for $1044) I only have 2 cc's. Chase Freedom Unlimited. (10 months old $1500 cl) Capital 1 QS1 (4 months old- $400 cl) . Both are used almost 2 times the limits before balance cuts. QS1 always paid in full. Chase usually has a balance (never more than 30 % utilization ) and every month i pay it lower than the month befores balance which has been making my Fako scores go up. My fico scores seem to be decreasing since i got the subscription. Its a real bummer! The other day i paid chase FU down to a complete zero balance. So now i have 0 utilation on both cards. Today i get an alert from Fico stating paying it off made my score go down 7 pts. ALL MY FAKO SCORES WENT UP. I thought paying down a cc is a good thing. My fico scores are on a steady decrease while im doing everything right. Accounts are aging. Only 2 inquiries in last year. Oh and i have 100 % payment. What am i doing wrong? All advice is welcome. Please!

[Anonymous]

All zero, AKA AZ, meaning reporting zero on all accounts, carries a scoring penalty. You're lucky it's only 7, most gets hit with 15-20. No worries though, as soon as you report a balance on one of your cards next cycle, you will get the 7 points back. The logic for the penalty is that your report looks like you're not using your cards at all to everyone else who is not the issuer of each card who obviously knows about your activities internally.

I strongly recommend that you use CK only for its reports and to ignore the scores altogether, VantageScore truly is meaningless other than creating confusion for new comers like you, if everyone follows this golden rule, the number of new threads on this forum would probably be cut by a third.

[Anonymous]

Oh... I have read about the AZ method before. I did not know it would affect me like this in 1 paid down to zero month. See i thought paying it off would be a good thing. 😔 Do you suggest leaving 5 dollars on one card, always??? Or more? As far as CK goes, i am thankful for it, bc once i was turned on to it, it finally made me realize that i should be watching my credit. With more and more research it did lead me to here, finally. The real truth! CK is goner for me now that i know there's no means to it at all. I was just referring to it as my credit scores should be going up...not down like the Fico scores are doing for me. I want to do what it takes to get my real scores up. I want a financially healthy life. Thank you for your advice, i will learn more about the AZEO method now and proceed with it for now on.

[Anonymous]

There is no AZ method, only AZEO (All Zero Except One) method, AZ is only used to describe that you messed up by allowing the "Except One" account to post $0. And yes, the penalty for AZ is immediate just as is the lifting of the penalty when you report a balance to "Except One" account on the next statement.

Don't stress out too much, if you keep reading and learning you will eventually see the big picture, you will then realize that these little scoring variations caused by UTI or AZEO (no AZEO) are just temporary conditions, mostly meaningless in the grand scheme of things. The most importantly thing is to always pay on time and never carry a balance (paying interest), good scores will follow.

[HeavenOhio]

Credit Karma is useful for its TU and EQ reports that are updated weekly. Blow off the rest of it.

$5 is a good balance to report. You don't want to go much lower than that because most banks will waive small balances rather than bill you. When that happens, a balance of zero is reported. Small balance waiver thresholds actually vary from bank to bank and are almost always less than $5. But sticking to the $5 minimum is easier than keeping track of what each bank does.

(If you happen to have Bank of America's Better Balance Rewards card, let your statement cut at at least $10. They've been known to waive $5 balances. When that happens, customers lose out on their quarterly rewards.)

[Anonymous]

Thanks for the tips! I feel alot better after reading your responses. I love having these forums bc I would have been driving myself crazy trying to figure it out. Everything you guys said...makes total sense!

[Miner]

All my balances on my CCs just reported $0 today.  I lost EX:-9, EQ:-20, TU: -1. 

I'll get that back in 2 or 3 days when my other credit card reports with a small balance.  I rotate the card that I let report every few months and because their report date is a few days apart, I either see all my balances zero'ing out or 2 cards reporting a balance in that tiny interval.  So I can say with confidence, you need a card reporting a balance, though a small balance is better than a large one.  If you don't have a lot of cards, then you don't want more than 1 reporting a balance.  It doesn't cost you any interest to allow a card to report a balance.  It only costs you if you don't pay the full balance from your last statement before the due date. 

[egghead88]

Sounds like you’re on the right path. Here’s a few things to consider. The AEZO works but you only have 2 CCs. You need a third one to see this method benefit your score. With only 2 CCs, it sound like you have a thin credit file. That alone is probably the primary driver to your erratic credit score. Try adding an installment loan to your credit. It can be a small loan. I believe if you added 1 additional CC, an installment and garden for about 6 months, you could be easier at +700 when those medical collections drop off. Good luck!

[Anonymous]

A decent car loan is really the next step that i would like to take. Im not in NEED of a car just yet. But the car is going to be a NEED very soon. Ive been shopping around ( dont worry- i dont let anyone pull my credit ) but im learning where i need to be "credit wise" to get that decent loan. Ive been really down the last couple days seeing those decreases. Green plus signs make me happy. Red negative signs make me very sad. Sitting here driving myself mad about $. I make almost 6 figures a year, yet my yucky credit makes me feel like i dont have much. Just a couple weeks ago i was on a high because of i was thinking i was doing fantastic! Then, those decreases came in and took the joy away, lol. So i defintely plan on leaving the $5 on the next card that reports in a long 3 weeks. Ive been reading these forums for about a month now trying to learn anything i can from all of you. Ive been considering another cc but not sure if i should wait till i get those points back. I dont think ill get approved for much with my credit being where it is today. All this waiting has me thinking about all these different situations. Low score. High car loan. Low scores. Credit card denials with wasted hard pulls. I did a pre qual a week ago on Amex and Discover, neither had anything to offer me. I just feel stuck and im afraid ill be stuck with these low scores for a long long time. I cant wait to see the points come back, plus more.

[Anonymous]

Chase FU will report a zero balance to CRAs within a day or two of payment. I know, I accidentally let it report zero ( due to a credit)  mid cycle and I lost points like you did. Easy to fix, hate the wait.

CK helped me a lot also. I now understand FICO & credit much better. But, as you say, CK serves a purpose. Also... they are great to get alerts if something is going on with your credit. My Vantage3 scores steadilly rose on CK/CS. I loved controlling my credit destiny. As you are finding out, whats good for FICO isn't always good for Vantage3. My FICO scores now rise, my Vantage, not so much... they are now 30+ points lower than FICO.

I've seen a lot of posts from people saying they got Amex BCE with a score like yours. Maybe Discover also... hopefully others can help with that. You are on the right track. Scores go up and down... but... you are headed in the right direction.