Credit score decrease

[Anonymous]

---

@Anonymous wrote:
The CL prior to increase was $3000. I will be paying off the $136 balance of one CC this week. I will have the other CC paid off by next month. I do know the credit increase dropped my score as well. I’m just trying to find the balance of how to increase my scores. I don’t have any late payments for the past 3.5 years. Due to a recent total loss, my former car was paid off (which also decreased my score) and I had to take out a loan for another car and payments have been on time. It just seems like my credit scores just keeps dropping. So frustrating. But thank you all for your help.

---

There's no reason why a credit limit increase will drop your scores.  The two most plausible reasons for your drop would be (a) both, or 100% of your credit cards reporting balances to the credit bureaus, and (2) the second credit card crossing the 28.9% utilization threshold.  Assuming the $1331 balance was reported against a $3,000 credit limit, that card's utilization would have been 44%.

Your situation typifies why its often recommended to have three credit cards; if you allow one to report a balance only one-third of your total number of cards would have a balance and your FICO scores wouldn't be penalized.  So in addition to exploring CLI with your current cards you should also look into the possibility of adding another credit card.

[SouthJamaica]

---

@Anonymous wrote:
I have 2 CC which both report balances. 1. CC balance $136.43 CL $1250. 2. CC balance $1331.93 CL $6000. I also just recently had a credit limit increase on the second CC (not requested they automatically increased it).

---

Adding $57 to either of those balances would not affect your FICO scores, so it was something else that caused the score decrease.

[SouthJamaica]

---

@Anonymous wrote:
The CL prior to increase was $3000. I will be paying off the $136 balance of one CC this week. I will have the other CC paid off by next month. I do know the credit increase dropped my score as well. I’m just trying to find the balance of how to increase my scores. I don’t have any late payments for the past 3.5 years. Due to a recent total loss, my former car was paid off (which also decreased my score) and I had to take out a loan for another car and payments have been on time. It just seems like my credit scores just keeps dropping. So frustrating. But thank you all for your help.

---

A credit limit increase would not drop your score.

[HeavenOhio]

---

@Anonymous wrote:
No it’s been maintained at a utilization of 22%. Now I’m confused because I thought CU was supposed to be good if it’s kept at 30% or under. When I have paid off my CC in the past my fico score decreases. So I’ve kept it at 22%.

---

"Under 30%" translates into 28.9% or below. That's because all fractions round up, e.g. 29.00000001% turns into 30% and is no longer under 30%. To be clear in our posts, it's easiest to represent the thresholds as 8.9%, 28.9%, 48.9%, 68.9%, and 88.9%. That eliminates any confusion when one is trying to sneak under a threshold.

Keeping all cards at 28.9% or below is considered "responsible" borrowing and will keep lenders happy. That's generally the second best scoring tier for utilization. The utilization portion of your score is usually optimized when overall utilization is at 8.9% or below and no card exceeds 28.9%.

Also considered is the number of cards with positive balances. One card with a positive balance with all other cards reporting zero is best.

Some have reported dings when they're lower than the 8.9%/28.9% thresholds. We're not sure of the reasons behind that, but we know it happens from time to time. To achieve your best possible score, report a tiny balance ($5, but not much more) on one card with all other cards reporting zero. We call that AZEO (all zero except one).

It should also be noted that there's a fairly substantial ding when all cards report zero. It's not a reason to panic because your points will come back the next time you report a (reasonable) positive balance.