A lender ran the typical "what if" scenario using CreditXpert Wayfinder, and sent me the results. According to the report, I could raise my score by around 24 points by paying down certain CC accounts to a balance specific to that account (I carry a high amount of debt, and the report the lender sent was based on paying down debt by around $5k). I followed that to a T, and all of the accounts have since reported their new, decreased balance to all three CRAs (as of three days ago). I use the MyFico monitoring tool to view my scores, and my scores haven't moved a single point. Nothing else has changed on my reports - no new baddies, no inquiries, no new credit, nada. Based on some of the info from these boards, I signed up for the 14-day trial on PrivacyGuard and started playing around with the simulator. I understand PrivacyGuard displays FAKO scores and simulators aren't 100% accurate, but using the simulator seems to verify that further paying down balances by another $5k has no change on my score.
Was the lender just wrong, or is the CreditXpert tool wildly inaccurate?
All simulators are unreliable, including those that come with a tool that uses FICO scores. (E.g. the simulator at myFICO.)
In this case the unreliability is raised even higher since CreditXpert scores are not FICO scores.
The folks here can advise you far better than any simulator can. They'd first need a list of all your revolving accounts, along with the balances and credit limits as they appear on your latest reports. Include all open revolving accounts (regardless of balance) and closed accounts that have a positive balance.
Also helpful would be whether you have any derogs (lates, collections, chargeoffs, public records, etc.) on your reports. If you do, you'd want to describe those in detail as well.
OP, please do not trust simulators at all. They're all garbage, IMO.
A $5000 revolving debt paydown isn't enough information for us to give you an idea of what sort of score increase you could expect. It could be anywhere from 0 points to (say) 100 points depending in profile. If someone has $5000 in overall credit limits and is carrying $5000 in revolving debt, it's possible that the paydown could result in FICO score gains near the top of the range I proposed above. If they have $100,000+ in overall limits, it's possible that the $5000 paydown may result in 0 FICO points gained.
As CGID suggested above, go ahead and list out all of your accounts with their balances/limits if you'd like some further input.
It’s true paying down a fixed dollar amount could have zero impact on your score if you don’t move between utilization thresholds.
You said you have high balances. If paying down your debt does not move you below 29% utilization then yes, even $5000 will not move your score. You could theoretically improve you score by 50 points with just $100 if that $100 moves your you from 30% to 29%. You really want to get your numbers below 8.9% for a large score boost but that sounds like it may be out of your reach at the moment.
Note, there is some small improvement getting under 50% which it sounds like you might be above.
This is why simulators are generally useless. Because simple math with thresholds will tell you what you can do to improve your score. The simulatiors on all the sites tell me to pay my bills on time and my score will go up.🤔 🤯
Thanks guys. The $5k I paid down is a small drop in the bucket compared to my overall debt, but again I was simply following the advice of what the lender had shown me. Here is a detailed breakdown of my credit report as of today (it's ugly, I know). All balances includes the most recent $5k i paid down across several credit card accounts
Account Balance Credit Limit
Nissan Motor $24,795 N/A (auto loan, never late)
Ascend CU $17,000 $17,000 (open credit line, never late)
One main Financial $13,992 N/A (close-ended personal loan, never late)
Infiniti Finance $12,886 N/A (auto lease, 30 days late once in 10/2018)
Lending club $8,076 N/A (close-ended personal loan, never late)
Hertitage CU $4,861 N/A (close-ended personal loan, never late)
Merucry Credit Card $3,377 $4,500 (never late)
Avant Personal Loan $4,400 N/A (close-ended personal loan, never late)
Capital One $2975 $4,000 (30 days late 11/2012)
Rise Credit $3522 $3500 (never late)
Plain Green $2285 N/A (Installment, never late)
Mariner Finance $2043 N/A (installment never late)
WalMart CC $1471 $1500 (never late)
Merrick bank $1283 $1800 (60 days in 11/2012)
Credit One $1133 $1500 (never late)
Cap One $1020 $1300 (30 days late on 6/2012, 8/2012, 10/2012)
Macys $981 $1000 (never late)
Merrick $908 $1200 (never late)
CBNA $852 $1010 (never late)
CareGiver Credit $800 $704 (never late)
Freedom Finance $646 N/A (personal loan, never late)
Covington $635 N/A (personal loan, never late)
CBNA $550 $750 (30 days late 1/2014)
target $510 $900 (never late)
Milestone $401 $300 (never late)
American Eagle $90 $230 (never late)
Jared Jeweler $0 $5300 (never late)
Republic bank $4500 N/A (personal loan, was 30 days late both on 9/2018 and 10/2018)
All other accounts are closed with $0 balance. Several of those closed accounts have 30 day lates from 2012 (occuring once). One of the closed accounts has a 30 day late from 2014 and 2015.
I have one collection account that was paid in full and closed in 2013, other no other baddies,
I also have about 30 inquiries within the last year. About 6-7 of those are when I was shopping for consolidation loans last year.
Let me know your thoughts, really appreciate the help from everyone!
The best actions for you are listed below in order of priority:
(1) Never be late again -- ever. Use autopay or similar tech tools to reduce or eliminate that this could happen inadvertently. Have at least a couple months of your salary in a savings account to prevent you from ever being in a situation where you deliberately are late because you don't have the money to pay.
For credit cards and other revolving accounts:
(2) Always pay at least $2 more than the minimum payment. When creditors see that you are making only the bare minimum payment on revolving accounts, it is often considered a red flag for a person who might soon become delinquent. When a creditor perceives this it can lead to balance chasing and other forms of Adverse Action.
(3) Pay each revolving account to under 87% of its credit limit.
(4) Pay each revolving account to under 67% of its credit limit.
Note: when you have achieved #4, your profile will no longer be screaming High Risk.
(5) Continue to pay off debt in whatever fashion will ensure that you will get it all paid off. Some people find the emotional rewards involved in the Snowball method a big help -- others focus on the more mathematically sound approach of paying off high interest debt first. If you have an account that is vastly higher in interest rate than another, I'd attack the high interest debt first -- no question. If your interest rates are not much different, lots of people love the feeling of Snowball.
Very high on your priorities should be three more things:
Stop applying for any more accounts. The only exception might be applying for a consolidation loan 13 months from now, but only after you have completed step 4.
Stop using credit cards and any other kind of revolving credit.
Figure out how you have gotten into financial trouble, and figure out a strict plan (and budget) that will ensure that you have a big chunk of money every paycheck to pay off your CC debt. This will likely mean things like no restaurants, no vacations, etc.
Thank you! This was extremely helpful
Out of curisoity, how did you land on 67% as being the threshold?
I've set up auto-pay on everything, so I won't be late ever going forward. I've also recently created a strict budget (together with my wife)
I will def take your advice and a few more $$ to each payment.
The good news is that I am fortunate enough to pull a large salary (much of this debt was incurred prior to a recent large uptick in my pay) and I am confident I can quickly achieve step #4 by the end of the month.
Our goal is to get our scores high enough so that we may get approved for an FHA loan in the next month or two, so that we may purchase the house we currently rent. I've already talked to lenders who follow strict FHA guidelines with no overlays I'm trying to do whatever it takes to get my scores to that magic 580 mark without taking away from our downpayment which we have saved up. Hopefully that's possible if I can get additional debt paid over the next few weeks. If this is a pipe dream please let know!
The precise utilization breakpoints are:
88.99%, 68.99%, 48.99%, 28.99%, 8.99%
I made the first two numbers 87 and 67 because typically people end up getting interest for that month added back on in the hour before the CC company reports to the bureaus, thus a person who got his CC balance down to 68.6% the day before would almost certainly cross back to 69.1% or higher when it reported.
If you have plenty of money available for paying off CC debt, you should pay all revolving accounts to zero except one Plain Jane credit card with a $20 balance, say. If you do not have quite that much spare cash, see if you can pay all revolving accounts to under 47% with your total utilization at under 28%.