Does anyone understand how credit reporting really works?

[Anonymous]

Received the following alert in My Fico about TransUnion that decreased my MyFico score 14 points

The total balance on all your Bankcard account(s) has decreased by $20. This change applies to the sum of all Bankcard balances.

Can anyone actually make sense of the credit bureau's reporting. How in the world can you actually pay down your accounts being well under the utilization and drop in MyFico. So if you pay off, you get dinged, if you have high balances you get dinged?

Very frustrating and makes me want to return to using Cash and My Visa Debit for everything. 

[Anonymous]

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@Anonymous wrote:

Received the following alert in My Fico about TransUnion that decreased my MyFico score 14 points

The total balance on all your Bankcard account(s) has decreased by $20. This change applies to the sum of all Bankcard balances.

Can anyone actually make sense of the credit bureau's reporting. How in the world can you actually pay down your accounts being well under the utilization and drop in MyFico. So if you pay off, you get dinged, if you have high balances you get dinged?

Very frustrating and makes me want to return to using Cash and My Visa Debit for everything. 

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Did you pay that $20 down to zero and do you have any other revolving balances reporting now?  What service are you using to monitor your scores?

[credit_is_crack]

This is a loaded question. Movement up and down can be from balances (crossing thresholds - and usually work negatively as the balance moves up), but it could also be driven by:

• Accounts being fully paid off (everything shows zero)
• Auto/Mortgage loans being paid off (and just taken out)
• Aged accounts secretly falling off your credit report (10yr mark)
• Accounts aging past 6 months, then 1 year (no accounts under that age)

I've seen these alerts too and when everything goes to zero, my score does not like it. At the same time I've discovered my optimal score happens when I have a few cards (4-5) with balances that total les that $1,500. I have no idea why that specific number and I don't put much effort into it, but when all they cycles line up just right, my scores get a bump upwards. 

The more accounts you have, the less any individual one will sway the score. I'm not saying run out and get 50 accounts, but I noticed as my "portfolio" thickened, the swinging really stopped 

[Anonymous]

Same here. Experian Fico 8 went up 20 points yesterday for AZEO instead of AZ's this month.

TransUnion Fico 8 went down 10 points for the same thing.

Frustrating.

[SouthJamaica]

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@Anonymous wrote:

Received the following alert in My Fico about TransUnion that decreased my MyFico score 14 points

The total balance on all your Bankcard account(s) has decreased by $20. This change applies to the sum of all Bankcard balances.

Can anyone actually make sense of the credit bureau's reporting. How in the world can you actually pay down your accounts being well under the utilization and drop in MyFico. So if you pay off, you get dinged, if you have high balances you get dinged?

Very frustrating and makes me want to return to using Cash and My Visa Debit for everything. 

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You're assuming there's a connection between the decrease in total balances and the score change, but there's no basis for that assumption.

MyFICO alerts don't provide reasons for a score change. There are certain events which trigger MyFICO alerts. If there happens to be any difference between your present score at that particular bureau and the previous score reported to you from that bureau, the score change is tacked on to the alert. There is not necessarily any connection at all between the score change and the alert substance.

MyFICO explains this in the "learn more" link contained in the alert:

"Why did my score go up when I got an alert for something negative (or why did my score go down when I got an alert for something positive)?
The short answer: Your FICO(TM) Score may change because of other events not monitored by an alert.
Whenever we send you a credit alert, we also send an updated FICO Score. To ensure you get the most current score, we calculate it based on your entire credit report at that point in time - not just the new information on the alert. This means your new score may reflect other changes that are outside of the things we watch for (see everything we monitor).
Sometimes you may see your score increase when you think it should've decreased, and vice-versa, but you'll always have your most up-to-date and accurate score."

[Anonymous]

Everything in moderation. If you don’t use any revolving credit, you get dinged; you use too much, you get dinged. Just a little bit, just right.

[Revelate]

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@Anonymous wrote:
Everything in moderation. If you don’t use any revolving credit, you get dinged; you use too much, you get dinged. Just a little bit, just right.

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Goldilocks credit!

[Anonymous]

Agreed. lol

There is so much ignorance out there about credit where I'd say that 98% of the populace is unaware of how to truly manage credit beyond just making on time payemnts and not going over the limit. Even tough they may have decent to good scores it could be higher if they only knew to stop doing "this" or "that", and it's complicated by the numerous youtube videos out there that are just click bait for nonsense. 

Some of People still seem to believe in the old "myths" surrounding credit as well. 

A freind of mine bought a new car in 19 and plans to have it paid off completely by end of this year, which is great but it will have consequences on his credit being his only insallment loan. As it was he had no previous auto loan on is report when he bought said vehicle so he was dinged for that, which menas he'll be dinged again for it in ten eyar when he buys another. On the positive side he won't have a car payment anymore.

Which begs the question of Finance over Fico, and when is it worth maintianing your credit score versus paying interest? The Money he's saving by not paying interest on the fial 3 years of the loan is likely worth more than the point drop he'll see. And being in the high 700's it's likely a non issue. 

[Anonymous]

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@Anonymous wrote:

Agreed. lol

There is so much ignorance out there about credit where I'd say that 98% of the populace is unaware of how to truly manage credit beyond just making on time payemnts and not going over the limit. Even tough they may have decent to good scores it could be higher if they only knew to stop doing "this" or "that", and it's complicated by the numerous youtube videos out there that are just click bait for nonsense. 

Some of People still seem to believe in the old "myths" surrounding credit as well. 

A freind of mine bought a new car in 19 and plans to have it paid off completely by end of this year, which is great but it will have consequences on his credit being his only insallment loan. As it was he had no previous auto loan on is report when he bought said vehicle so he was dinged for that, which menas he'll be dinged again for it in ten eyar when he buys another. On the positive side he won't have a car payment anymore.

Which begs the question of Finance over Fico, and when is it worth maintianing your credit score versus paying interest? The Money he's saving by not paying interest on the fial 3 years of the loan is likely worth more than the point drop he'll see. And being in the high 700's it's likely a non issue. 

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@Anonymous well it might be a question of minimizing the amount of interest paid and strategically maintaining an SSL when necessary. 

[Anonymous]

Yeah I mentioned to him about the hit scores take for not having an active loan and what he could do to avoid it, and he basially told me it's too much of a hassle. He really doesn't use credit that much anyways, the last time he bought a car was in 99 which was his first major purchase.

He also never apps for cards despite me telling him about some of the great offers I've gotten over the years, he keeps insisting he has too many already. Though compared to me that's not very many, eye of the cardholder. lol

So for a person like him the groundwork to maintaing a high score might seem like too much work, thus prefer to just let the card fall where they may. He'll never need a score higher than 780 anyways as he doesn't plan to ever buy a house or likely a car for another 10-15 years.

Whereas for me I treat it like some kind of sport activity where I have to win by strategically using each CC and paying down each balance accordingly to keep it under a certain threshold.  I could pay off all my balances today but why should I if it's not costing me anything?