Dramatic Drop in Credit Score

[Anonymous]

I recently began rebuilding my credit and have learned a lot from these boards.  My question is:  My credit score dropped overnight from 659 to 629. The only change is my credit utilization went from 25% to 30%. I thought 30% was okay and have been very careful not to go over that, so was disappointed in the drop in score. Does that seem correct?

[RSX]

28.9% is the known threshold.   Drop back to 27/28 % and I bet you get all those points back

[Anonymous]

Thank you so much for the fast reply. I will pay some cards down.

[RSX]

No worries.  I copied this from another post. I keep it in my phone notes for reference.  

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1. Pay all cards down to 87%, tackling high interest first.
2. Pay all cards down to 67%, tackling high interest first.
3. Pay all cards down to 47%, tackling high interest first.
4. Pay all cards down to 27%, tackling high interest first.
5. Bring balances to zero, starting with the smallest balance first.

88.9%, 68.9%, 48.9%, 28.9%, and 8.9% are known thresholds. Scoring bumps are likely for crossing these, although it's possible that not every threshold will cause a bump. Paying to 87%, 67%, etc. ensures that the next month's interest doesn't bump you back up over a threshold.

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[Anonymous]

Best bet is to pay off enough debt that each card is at 27% or less. That way when interest is added, it won’t push you back up over that 28.9% breakpoint.

[HeavenOhio]

Welcome, @Anonymous.

"Under 30%" is technically correct. But it's misleading and confusing. The problem is that all fractions round up. 29.00000001% rounds up to 30% and is no longer "under 30%." So it's a lot easier just to say 28.9, 48.9, etc.

Some of us have been suggesting paying to 27%, 47%, etc. if you're paying interest. I've noticed lately that @SouthJamaica has been saying that paying to 28%, 48%, etc. is sufficient absorb the next month's interest. If he can convince me that the higher numbers are safe, I'll use them in future posts. Of course, if you're not paying intereset, paying to 28.9%, etc. is fine.

It should be noted that the thresholds listed above exist for both overall utilization and individual card utilization. Individual card utilization is determined by the card that has the highest utilization. Overall utilization is more important. Given the size of your score drop, I wouldn't be surprised if you were hit for both overall and individual card utilization.

As mentioned above, your points will come back because utilization has no memory. There's no need to become discouraged when you know you can easily address an issue.

[Anonymous]

Thanks.  I paid my cards down yesterday so now I have one at 26%, three at 25% and four at 0%.  I know it will take forever for them to report new balances so not expecting score to go up for a while yet.  

When I started in March to rebuild my credit, my son added me on his Kohls as AU (so I would have some credit history).  That worked because I applied for and received Cap Platinum with only $300 credit.  After five months they raised it on their own to $3300. (yeah, I almost fainted).  I have since accumulated 7 additional cards - total $10,000 CL.  

I got Kohls to remove me as an AU, and on my credit report it does show payments stopping and balance remains what it was when I got off.    I know the balance is even higher now.   The problem is that Kohls $967 balance is still showing on my list of cards and it is 38%.  I don't know how to get it removed from my credit information.  I know it will reduce my lenghth of credit, but I am thinking this 38% is hurting more. 

I am very new to this (even though I am 71 years old).  I have been able to find more information on this forum than anywhere else.

So thanks!

[Anonymous]

If it doesn’t come off over the next reporting cycle you should be able to call the bureaus and request its deletion since you were an AU and no longer are one. Pretty sure it’s an easy fix if I recall correctly what others have done.

[Anonymous]

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@Anonymous wrote:
If it doesn’t come off over the next reporting cycle you should be able to call the bureaus and request its deletion since you were an AU and no longer are one. Pretty sure it’s an easy fix if I recall correctly what others have done.

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Do you think the positive beneift of removing that 38% to decrease utilization will outweigh the negative effort of a much shorter credit history?  

[Anonymous]

As long as your utilization is lower than 38%, definitely. If it is, then unloading that AU UTI will lower your overall usage. Plus, credit usage is 30% of your score. Age factors are 10% or 15%.