@Anonymous wrote:
@Anonymous wrote:
I've had a Wells Fargo credit card for 3 years, and decided it was time to open a new one. I chose the AMEX Everyday Preferred, and my Experian was pulled and I had a 771 FICO. I get a free FICO score each month, and the initial inquiry took it to a 763. I've always paid in full each month, on time, and did the same. When I looked at my free FICO for Experian, I see an additional 20 point drop with the following explanation "In your case this number is too low because you have very few accounts or because you've missed payments recently on some of your accounts." Both Wells Fargo and Amex agree that I paid in full and on time. When I contacted Experian they said that I've never paid late, but that Amex hasn't reported anything as of yet. I had about 20% utilization on both cards. When It was just my Wells Fargo, I would use about 25% of my CL each month. A 28 point drop seems excessive to me, while my overall utilization is lower with my CL now more. What am I doing wrong, and what caused the drop? Will my score continue to go down the way I'm paying off my cards?
Thanks in advance.
I don't see this commonly mentioned here, but this is from the negatives criticism from a MyFico report:
The FICO® Score considers the number of accounts showing on time payments. In your case this number is too low because either you have very few accounts or because you've missed payments recently on some of your accounts or have accounts with derogatory indicators reported.
Down below this criticism, it lists how many accounts it considers current and makes this statement:
FICO high achievers have an average of 6 accounts currently being paid as agreed
My own experimentation indicates that a new account will be counted as a current account on the 1st of the month following the new account's 2nd statement cut. I don't know how many accounts it takes to remove that particular criticism yet, but I know it takes at least more than 3.
Great point, Gridium. I very much agree. That's what I was getting at in my first response to the OP (where I said "Something that may improve your profile is to create a short history of making some payments [on this account].")
There's a section that appears on one's credit report called Payment History. It often shows an OK next to every month where you made an on-time payment, and goes back many months.
My profile had three cards on it for the last several years (with eight installment loans, mostly closed). All the accounts showed a solid payment history Five months ago I added a fourth card and naturally took a score hit. I watched my reports and saw that for the first 75 days or so that account was showing "no payment history." Then at Day 80 Citibank reported that I had a payment history with two OKs. My score recovered several points right at that moment.
Intuitively this makes sense to me. At first when a person adds a card there's substantial risk. Are you adding a card so you can pay for three vacations and skip town? FICO doesn't know yet. But once the issuer starts reporting a small number of consecutive OK payments (and if the balance on the new card is low) then FICO begins to relax.
That's guesswork on my part, but it seems borne out by my experience.
Thus my advice to the OP to use his new card every month and keep the balance that reports fairly low, e.g. < 9% of the card's credit limit. If he can get 3-4 OK's in a row, then he might want reduce it to zero, allow the other card to report a fairly small balance and see what happens. I bet he will show a big improvement.
