Data Point large paydown effect on FICO

[WTL1]

Well, I ran up the cards quite a bit this year as I was hardly at work due to being busy dissolving an estate, which eventually paid me a fair bit in inheritance. I paid off about $80K in debt over the last two months, and enjoyed a 160 point raise average, across the board on my FICO 8's (please don't ask for minute details on other scores, it's not really the point)

However, I accidently paid everything to zero and was unsuccessful in adding a last minute charge before my last card closed for the month. 

As I feared, my zero total utilization was rewarded with a 25 point drop by Equifax. Experian noted the payoff and did nothing, and Transunion hasn't recorded the account yet. I have no installment loans of any kind.

AZEO is for real, at least as far as Equifax is concerned.

[GatoradeZeroGuy]

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@WTL1 wrote:

However, I accidently paid everything to zero and was unsuccessful in adding a last minute charge before my last card closed

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Could see if any of your lenders will do an off-cycle update to get a new balance updated. 

Nevertheless, congrats on getting a ton of debt paid off. 

[WTL1]

Thanks, but it's not too important. I will be going for an auto loan, possibly as early as mid Jan, but I have 15 accounts, some of them reporting as soon as end of this month, so I'll be fine. I just thought it interesting, they really don't like you debt free.

[FireMedic1]

Congrats on the debt reduction.

[sarge12]

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@WTL1 wrote:

Well, I ran up the cards quite a bit this year as I was hardly at work due to being busy dissolving an estate, which eventually paid me a fair bit in inheritance. I paid off about $80K in debt over the last two months, and enjoyed a 160 point raise average, across the board on my FICO 8's (please don't ask for minute details on other scores, it's not really the point)

However, I accidently paid everything to zero and was unsuccessful in adding a last minute charge before my last card closed for the month. 

As I feared, my zero total utilization was rewarded with a 25 point drop by Equifax. Experian noted the payoff and did nothing, and Transunion hasn't recorded the account yet. I have no installment loans of any kind.

AZEO is for real, at least as far as Equifax is concerned.

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Last year I simultaneously paid off my mortgage, and bought a new car....50+ point drops across the board. Not a surprise though, as my installment loan utilization went from 3% on the house to 100% on the car. Both were my only installment accounts. Paying off the credit cards, and forgetting to let one post will only cost you those 25 points for one month, provided you let one report next month. That is the case on all but the fico 10 scores anyway. It is just how the point in time metric of utilization works. You will get all 25 points back next month if one card reports.

[SouthJamaica]

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@WTL1 wrote:

Well, I ran up the cards quite a bit this year as I was hardly at work due to being busy dissolving an estate, which eventually paid me a fair bit in inheritance. I paid off about $80K in debt over the last two months, and enjoyed a 160 point raise average, across the board on my FICO 8's (please don't ask for minute details on other scores, it's not really the point)

However, I accidently paid everything to zero and was unsuccessful in adding a last minute charge before my last card closed for the month. 

As I feared, my zero total utilization was rewarded with a 25 point drop by Equifax. Experian noted the payoff and did nothing, and Transunion hasn't recorded the account yet. I have no installment loans of any kind.

AZEO is for real, at least as far as Equifax is concerned.

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It's not AZEO that's at issue, it's the "all zero penalty".

[sarge12]

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@SouthJamaica wrote:

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@WTL1 wrote:

Well, I ran up the cards quite a bit this year as I was hardly at work due to being busy dissolving an estate, which eventually paid me a fair bit in inheritance. I paid off about $80K in debt over the last two months, and enjoyed a 160 point raise average, across the board on my FICO 8's (please don't ask for minute details on other scores, it's not really the point)

However, I accidently paid everything to zero and was unsuccessful in adding a last minute charge before my last card closed for the month. 

As I feared, my zero total utilization was rewarded with a 25 point drop by Equifax. Experian noted the payoff and did nothing, and Transunion hasn't recorded the account yet. I have no installment loans of any kind.

AZEO is for real, at least as far as Equifax is concerned.

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It's not AZEO that's at issue, it's the "all zero penalty".

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True, having no credit card use showing on a month, gives no data for utilization. It appears as if you are using no credit. As a purely point in time metric in the alogorithm, utilization is figured in based only on what it is at the time of the credit pull, and zero is not ideal. That is addressed in the new fico 10T scores, so on that score, a zero balance report for one month will not likely result in such a score drop. That is a double edge sword though, because just paying all cards off will also not gain you the instant credit score bump you might desire for credit approval. Fico 10T will look at historical utilization, and not ignore the fact that when the credit pull happened, might have been the only time in 5 years the utilization was low. The bad thing is, it is the credit card issuer that will choose which score to pull. Tricks used in the past, such as paying cards off to get approval, knowing that doing so will result in having to live off of cards for a while, will not work with that score. How many issuers will transition to the new fico 10T, is yet to be known, but I suspect that high historical utilization is a better predictor of default, than just that days utilization. I would expect that issuers who seek to lessen their default rates will transition to that score, so AZEO might become irrelevant in the future.

[WTL1]

Usually pull my monthly 3-bureau reports ~20th, will look at my 10T and report here is anything interesting. I have a couple things reporting at end of month and will leave charges I just made to report, I usually clean minor accounts each month before statements generate.