Disapointed with FICO scoring

[natenica]

I have been working over the last year with getting my credit score fixed for future home and automobile purchase. My family had a devastaing health crisis with our children and we had 7 medical collections. My score in November was 545 and in April this year it was 650. I have Walmart, Capital One and Bank Of Americal credit cards all with a balance of $0. Score was going up big time as we have been working on the collections. Here is my issue. on April the 24th Capital One gave me a $3000 credit increase, Fingethut gave me a $1000 credit increase and One of the medical collections fell off of equifax. After all of that my score went up just 1 point after all of that activity. On top of that my credit ratio went from 19% to 10% but all I got was a 1 point increase. OK fast forward to this week. I had to use my credit card right before the statement came out and it was for $35. Boom i get text that my score has changed. It said your score has changed. I logged in and it said  your balance increase by $35. Guess what. I was docked 4 points. Im so frustrated because my score has not dropped in a year and with all the activity I have had in the last month im on the negative side because of $35. Can anyone with experience explain it to me. Kind of disapointed. Maybe my lack of understaning. I talked to a rep and she said its because they factored in the negative collections but I said duh they been doing that all along why with all this work over the last month im actually 4 points behind. Sorry for the long letter or typo im on phone. I just need someone to explain. 

[Anonymous]

Not all changes trigger MyFICO alerts. It's a huge limitation, and causes much confusion. Only real way to know what's going on is pull your reports. Doing so through MyFICO will cost more money. Some prefer to buy additional credit reports here; time is money. For those with the time, there are more cost effective ways.

Alternatively, one can pull reports free via CreditKarma (Equifax and TransUnion) and/or via AnnualCreditReport.com (can pull one report per bureau per year - can be staggered, such as pulling a different one every 4 months). Experian Credit Tracker is another choice, which allows for daily report pulls and updated FICO 8 score, but costs money and can be a hassle to negotiate a discounted rate when cancelling the trial - not difficult, but another paid service to manage and keep track of.

Rambling on, but point is there have likely been other changes to your reports you're not seeing. An old credit line that was closed years ago falling off can result in a score drop. Old collection accounts that haven't updated for a long time starting to update again will often drop score. Until all the collections are gone off the reports, your scores will remain depressed.

Finally, scores aren't everything. Lenders take into account one's overall credit profile. Your recent, relatively large, credit increases are reflective of this.

[natenica]

This is what I did after the 1 point bump. I have CK, CS and credit.com. I decided to go on and get my yearly free report. I paid an extra $13 for Myfico report. Every last one of them had $3000 credit increase, $1000 credit increase, one medical gone and ratio from 19% to 10%. But myfico showed 1 point jump. So I called the rep just to see if something was wrong. She saw everything I said and kept saying the same thing over and over about the negative I have when I told her they always been on there and score been doing amazing. I just wanted to know how they come up with 1 point after all that good activity when I have had big bumps for far less. Then Fri I got the text about my credit card balance went from $0 to $35. Lost 4 points from my score. I was like are you kidding. I'm just venting and I know its the system but you got to admit that's strange. Well im going to kep at it and make sure that $35 is back to zero. I have had another huge credit increase of over $3000 since the one im talking about. Maybe it will show soon. Our goal for the home is Dec so we got some time to recoup and get score up. Thanks for listening.

[Anonymous]

Credit limit increases alone may have little to no effect on scores. My guess is your collections updated more frequently and/or closer to the time the MyFICO alert scores were generated than previously. So many little things can cause scores to bounce around a bit - not worth worrying about minor changes of 10 pts or so and less.

The next big jump will be when those collections are all gone. All of them. Until then your scores will remain depressed. If you've already paid the medical collections, ask for tradeline (TL) deletion. If unable to get TL deletion via goodwill letter (GW), google HIPAA process (details can't be discussed here) for an alternative method.

If unable to pay the medical right now, then you'll simply have to wait for the next boost, which will come after many months of steady on-time payments. See the Understanding FICO Scoring topic forum for more details on what affects scores.

Mortgage lenders tend to use an industry variant of FICO, such as FICO Score 2, 4, or 5, which could be somewhat different than your FICO Score 8 shown. From my understanding, those other FICO variants do not update with your subscription - a report(s) with scores need to be purchased for update.

With all that said, based on your FICO 8 Score and credit cards you have and their decent limits, regardless of the FICO score variant the lender pulls, that shouldn't hold you back from getting a mortgage. Mortgage scores low as 580 are being approved these days, and 620+ (you may already be there) shouldn't hold you back from getting a mortgage. If seeking the absolute lowest rates, you'll likely need to wait another year or more to get to 720+, or alternatively, putting 20% or more down to avoid PMI, which will significantly reduce size of payments. On the other-hand, waiting too long could cost you a great deal - you can always refinance later on, if need be. Hope this helps.

[natenica]

Thanks a lot for the info. Im going to be glad when that day come when I have all I need and not have to play this FICO score game anymore. I have had myfico for over a year and this last month have been the most baffling. I got to stop obsessing over it. After going up 100 points in 6 months it was kinda of hard not to.

[Anonymous]

Totally understandable. I've been watching my reports and scores like a hawk, since starting my own rebuild a few months ago. Getting well into the 600s with baddies is easy. You're now at that next stage where advancing much with baddies will be challenging, though in your case, since they're medical collections not credit card charge offs, 700 is doable. And higher scores get, longer the wait tends to be for boosts.

[Revelate]

Different part of the algorithms and how the calculation is done from what I inferred from your post.  Agreed FICO can be fustrutating but it's what we have.

I didn't see any change at all from 13% to 27% utilization when I was testing FICO 04 a while back and that was a really good data point.  19 -> 10 may not cross over an aggregate utilization break point, I am nearly confident it doesn't break an individual tradeline one, and 19% is pretty darned good anyway.

The $35 increase, just at a guess, was on a different tradeline that probably went $0 -> $35.  Number of revolving tradelines with a non-zero balance also is a factor, and losing a few points isn't uncommon for this.

Will say though it's important to focus on the big picture over time: losing a few points here or there from balance changes isn't a big deal as you can always clean those up the following month.  100 point gain in six months doesn't suck whatsoever, seriously, congratulations!  Unfortunately it gets a lot more drawn out from here in terms of score improvements until derogatories start getting removed as ronpa suggests.  As long as your positive tradelines keep racking up pretty OK's on the reports, hammer the negatives.