Confused About Next Steps to Improve scores

[FICONewbie62]

@Thomas_Thumb 

Thank so much for the details on the FICO system. I need to learn more about it - this site has helped a great deal over this past year!

I appreciate the effort that you put into your response. Thanks again!

[FicoMike0]

Thomas_Thumb  really knows this stuff. I've found his advice very helpful. As far as adding an installment loan, it really works, if you don't have one , even closed, on your credit record.

I know taking out an otherwise unneeded loan seems nuts. I thought so for about 6 months, then I did it.  My scores went up 30 to 40 points. It's called a ssl , you can search it here. Simply, you deposit money , say $1500, in a savings account, and borrow it back for, say 5 years. Then you prepay 91% of the loan. You end up with a 5 year loan of $135, with no payments due for 4.5 years. The interest is 2%, total interest < $10. This loan stays on your cr for 5 years, enhancing your fico8 and fico9 scores. This deal is available only at nfcu and penfed, that I know of. 

[SouthJamaica]

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@FICONewbie62 wrote:

Thank you SouthJamaica.

I will see about increasing my credit limits on my existing cards - I hope that won't give me too big a hit. Or I can hold off.

what frustrates me is that, even staying well below 3% on my usage, I still get hit with a decrease if the balance goes up slightly. I just don't understand that. If my balance increases from $150 to $225, I get a drop in score - even though I am still using less than 1% of my available (on report days). I'm using much more during the month - I just make two payments in order to keep the reporting low and to avoid any interest payments.

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1.  Patience.

2. It's not so easy to trace cause and effect relationships between credit report data and credit score changes.

[SouthJamaica]

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@FICONewbie62 wrote:

Thanks Joe!

Any thoughts on balances vs % of use ?

Why is someone penalized for a small balance increase when the increased balance is still well below 3% of available credit?

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I don't know of anyone getting penalized for having a card go from 1% to 3%, so I'm guessing these small changes are due to other factors.

[SouthJamaica]

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@FICONewbie62 wrote:

Thank you. I'll sit back and see what happens, but even with the higher score, I feel that I will still see the various score drops when my small balance increases by a small amount.

it seems very sensitive to balance increases - but not as responsive to balance decreases!

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It doesn't work that way. If a certain percentage increase gives you a specific score decrease, you will get those same points back when the utilization decreases.

There is no upward or downward bias.

[FICONewbie62]

Thanks for the continued responses/advice.

here is a snapshot of the types of alerts I see for the small balance changes.Note that one score decreased, while the other increased - as a result of a $50 balance change!

[Thomas_Thumb]

The balance change is a trigger event to pull your credit file to generate a score. Nothing more, nothing less.

Clearly the data in your CRA files at the time pulled differed. Often this is due to update lag by CRAs. Thus, score goes up with one CRA and down with another. In reality, it was other attributes in your file not the $50 balance change that changed score.

There is often no correlation between a trigger event and the cause for particular score change.

[FICONewbie62]

Thanks for explaining that Thomas - the "trigger event" aspect makes perfect sense.

The MyFICO Alerts certainly make it seem as if the slight balance change is causing the score changes, but I now understand how that balance change simply prompts an updated pull of info from my file/files.

Thanks again for the education!

[NoHardLimits]

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@FICONewbie62 wrote:

Thanks for explaining that Thomas - the "trigger event" aspect makes perfect sense.

The MyFICO Alerts certainly make it seem as if the slight balance change is causing the score changes, but I now understand how that balance change simply prompts an updated pull of info from my file/files.

Thanks again for the education!

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@Thomas_Thumb is correct.  I just witnessed this behavior myself today.  I received a score change alert that said my score had dropped.  It was accompanied by another alert that said a balance had decreased.  However, I know that a brand new account just started reporting and that was what really caused the score to drop, not the decreased balance.

[SouthJamaica]

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@FICONewbie62 wrote:

Thanks for the continued responses/advice.

here is a snapshot of the types of alerts I see for the small balance changes.Note that one score decreased, while the other increased - as a result of a $50 balance change!

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You're making the mistake of assuming that the data change and the score change are connected. They are not.

MyFICO alerts don't provide reasons for a score change. There are certain events which trigger MyFICO alerts. If there happens to be any difference between your present score at that particular bureau and the previous score reported to you from that bureau, the score change is tacked on to the alert. There is not necessarily any connection at all between the score change and the alert substance.

MyFICO explains this as follows:


Why did my score go up when I got an alert for something negative (or why did my score go down when I got an alert for something positive)?

The short answer: Your FICO® Score may change because of other events not monitored by an alert.

Whenever we send you a credit alert, we also send an updated FICO Score. To ensure you get the most current score, we calculate it based on your entire credit report at that point in time—not just the new information on the alert. This means your new score may reflect other changes that are outside of the things we watch for (see everything we monitor).

Sometimes you may see your score increase when you think it should’ve decreased, and vice-versa, but you’ll always have your most up-to-date and accurate score.
https://support.myfico.com/hc/en-us/articles/360038084633