Credit score dropped after disputing inaccurate information

[Anonymous]

Can somebody please help me understand.  I created an account with myFICO to get my middle score at or above 620.  I used the simulators and followed the results perfectly.  I paid down 5 credit cards to a balance of $10.00 each.  Once 2 of the 5 reported to the bureau my Experian score went from 606 to 617.  Since my TransUnion score was already above 620 I was excited that I only needed another 3 points to hit my target score.  

Then I disputed the "reporting" date of 3 old credit cards that were included in a bankruptcy more than 5 years ago.  The 3 cards were still reporting as of Dec, 2010.  It was my understanding that they cannot continue to report after the Ch7 was discharged.  As soon as I got confirmation that the dispute process had started my score dropped from 617 to 604 taking me further away from my goal.  

Can anybody explain this to me?  I really need to get this resolved and have my middle score over 620 in the next 30 days.  Possibly once the other 3 credit cards update this will happen, but why did my score drop?

[Walt_K]

When you open a dispute, the disputed item isn't scored while the dispute is being investigated.  It's possible the cards were, on balance, helping you more than hurting you. 

I don't know the answer to whether or not the cards are allowed to report after your BK discharge.  Someone else can chime in.  Assuming they are allowed to report, once  your dispute is investigated, I would guess they will leave them on there and you will get your points back.  If they aren't allowed to report, and they are removed as a result of the dispute, if they were helping you, you won't recover the points.  At least not immediately.

[Anonymous]

The cards all show a zero balance.  But, since they are technically considered a "bad" debt because they are tagged as "included in a bankruptcy" and still reporting 5 years later it reports as a current day bad debt!  I hope I said that correctly.  It's been a long day.

[Walt_K]

All I know is that sometimes things that seem bad can actually be helping us.  For example, maybe it was helping your AAoA and you were getting more points from the good of the account than you were losing from its negative status.  Not sure if that applies in this situation.  In any event, we're outside my limited depth of understanding of credit scoring.  I'm sure someone willl come along soon with more information to help you out.

[Anonymous]

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@Anonymous wrote:

The cards all show a zero balance.  But, since they are technically considered a "bad" debt because they are tagged as "included in a bankruptcy" and still reporting 5 years later it reports as a current day bad debt!  I hope I said that correctly.  It's been a long day.

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Hi NeedTheTruth,

Welcome!  And glad you're posting here.

If I understand your original post correctly, the information on the accounts was all correct - you were just concered that they were still reporting and being updated?

Without seeing your report, I'm going to guess that they were reporting correctly.  If they have the correct balance, and if "IIB" is correct, then they can update (or continue to report) that information.  DH and I both have accounts that have been closed for a long time that continue to update monthly.  They continue to report the same info - 0 balance, closed date, etc.  GEMB JCPenney and a RCWiley accounts both come to mind.

These accounts will stay on your credit report for about ten years after they are closed.

I don't know about the "IIB" note - if it stays on for seven years, or ten years or whatever.  Perhaps someone else will chime in on this. 

You can often get a FICO score boost, btw, by having all revolving accounts but one report a zero balance - with the remaining one reporting less than 9% of the account's CL. 

If you look at the items on your FICO Score report, and list the items under "What's Helping Your Credit Score" and especially "What's Hurting Your Credit Score" you'll get some knowledgeable advice on how to increase your score.

Best wishes to you!

[Anonymous]

I am sorry, but vin my experience, FICO scoring is a very distorted, and inaccurate system to determine one's credit worthyness.

I will for one fight this no good system by sending complaints in to members of congress and rthe AG of Virginias office as they

along with Experian, TransUnion and Equifax use and consider many inappropriate situations to rate your credit.

What happened to, ABILITY TO PAY, PAST CREDIT HISTORY, NOT TO PENALIZE ONE FOR HAVING LOST THEIR JOB, THIS IS SO WRONG,

UNLESS AT A MINIMUM, THE CREDIT REPORTING COMPANIES SEND A STATEMENT ALONG WITH THE REPORT AS THIS IS THE REASON

FOR A LATE OR MISSING PAYMENTS, I MEAN, HAVE YOU HEARD ABOUT THE RECESSION, HAVE YOU HEARD ABOUT THE ECONOMY,

WHY IS THAT NEVER USED, HAVE YOU HEARD ABOUT ILLNESSES, I GUESS BERNIE MADOFF WAS IMMUNE TO THIS, BUT ALL THE REST OF HONEST AMERICANS ARE NOT IMMUNE TO THESE THINGS AND MUCH MORE AND THE FLAWED FICO SYSTEM DOES NOT ADDRESS THESE IN ANY FAR MANNER.

ABOLISH FICO, REGULATE EXPERIAN, TRANSUNION, AND EXPERIAN BY SETTING UP STATE BOARDS OF CONSUMERS TO ARBITRATE COMPLAINTS ABOUT FICO SCORE DISPUTES.

THANK YOU

[llecs]

FICO is just a number. You can have a high score in the 800s and still be denied. Lenders look at a whole host of other items about you and your credit that FICO doesn't even score or consider like employment history, income, your debt-to-income ratio, residency history, non-reported lawsuit history, other fixed obligations, etc. You can have a super high score, but if you don't have a job to pay back the loan or obligation, you won't get approved. I bring this up because you mentioned about losing your job. FICO doesn't look at your employment or your employment history. It also doesn't look at your ability to pay because it doesn't take your income or assets into account.

The credit reporting agencies do not include or disclose why you made a late payment. They don't have that info. Your creditors don't even disclose that.

There's a lot of challenges in this economy. Unfortunately too many people use credit as a crutch and don't pay off their credit cards in full each month like they should (I'm guilty of this). And because most everyone puts their only egg in one basket (their job), they run a higher risk of dropping that one egg, instead of keeping a second as backup, having more in investments, or having side businesses for extra income. It's important to diversify income. When they lose their sole source of income they rely on credit cards to get by and that's wrong. People aren't saving enough. Ideally you need to save at least 25% of your gross income. That way if they lose their job, they can use the savings to pay off debt and that'll result in a positive payment history as opposed to lates reporting. Reported lates due to a job loss isn't the fault of FICO, the credit reporting agencies, or the credit issuers. It is the fault of the debtor for a lack of planning. Thankfully FICO rewards you for being out of debt, which is what we all want anyway.