@MrBenchMark wrote:For the last few years I've worked on increasing my FICO score with it maxing out at a score of 830 at one point before setlling into an 820 for a period of time without changing. The only lines of credit I had was a revolving line of credit with Capital One where I would pay off my monthly statement balance every month and an installment loan that I had been paying on since 6/2013 with a 1.54% APR.
I knew that your credit score loves seeing utilization of different types of credit (e.g. revolving, installement, mortgage, etc.) and with using differenty types of credit, it looks good, but I never saw it coming when I recently decided to pay off my vehicle loan which was roughly $9,000 instead of paying the minimal amount of interest I had been paying; I simply made the choice to be DEBT FREE! I mean after all, is that not what we strive for in our lives is to be debt free; I know I had been working for that. Anyways as a result of paying my vehicle off, my FICO score dropped 41 point from an 820 to a 779. I know, I know...779 is still respectable but damn, I never thought I'd take a beating like that for choosing to be debt free.
So now with that happening, I am wondering if doing what I am currently doing with using my Capital One card and paying off my monthly statement balance every month, if my FICO score will still rise over time. I really dislike the idea that for my credit score to increase to where it was once I'd have to take out an installement loan and pay payments whereas I don't really have to.
Any input is welcome. Thank you in advance...
I think you just have to accept the reality, which is that while it is an unmixed blessing for you and me to be debt free, banks -- who are the customers of FICO -- have no interest at all in our being debt free. It is in their best interest for us to be enslaved to debt, and FICO is all about measuring which slaves to debt can be more or less relied on to be profitable for banks.
@MrBenchMark wrote:Yes, and I tend to agree with your view because all in all it's a game. So with being known, I am wondering if by simply continuing to use my credit card as I've been, if my score will rise again or stay stagnant...
Yeah I'm sure it will rise again, because the passage of time is a real strong component in the whole algorithm, and the negative effects of any event wear off over time.
I feel your pain.
I recently thought about buying a new car, which I haven't done for more than 15 years. So I took a look at my FICO Auto 8 scores, to which I haven't been paying attention lately since a car loan was the furthest thing from my mind. And it was a negative factor with all 3 bureaus' scores that I didn't have any recent auto loan activity. I.e. the fact that I paid off whatever car loans I had, on time, more than 12 years ago, meant absolutely nothing to them; they only want to know what I've done for them lately 
I think I got a huge insight into the lending mentality one day when I was reading the Barclay Ring card blog. In explaining Barclay's policy on CLI's, a representative of Barclay explained that Barclays is not just interested in avoiding risk, it's also looking for reward. So in looking at the degree of utilization that would warrant a CLI (or inversely a CLD) they look not just at risk, but at the potential profitability of the account, treating average balance as a proxy for profitability. So a person who consistently uses 20% of his credit limit is more likely to get a CLI than a person who only uses 1%.
@MrBenchMark wrote:I totally understand that, after all they're in the business of making money in the form of you paying them interest on the loan you get from them. When they loan you money, they're gambling you won't pay it off early and that you'll pay it off over the full term of the loan however long it is. If you pay it off early, they may very well look at it as a loss of revenue for them.
Somewhat. Admittedly the "cynical" view is that FICO is a profitability measurement, rather than a risk one.
That said, sounds as though you got whacked on the installment side of the FICO 8 algorithm. No big deal, if you want the points back easily just take the easy FICO strategist route of getting a small secured loan, pre-paying most of it, and then just sitting on it.
Or if you want the full story behind it:
@SUMRFUN wrote:That is interesting news to know. Since all of the accounts I have listed are at 6 months from the time that I went on my initial app spree. I'm keeping the credit util under 2% because for the longest I have used a debit card when I didn't have credit, an now that I have some credit, I can't mess up anymore or else!. So the magic to getting a credit line increase is to hover around 20% you think?? (showing a little profitability on the account for the issuer).
Depends on issuer, certainly the more you use the card in general the easier it is to get a CLI, but never revolve a balance you don't have to... CLI's aren't important honestly especially in the current market how easy it is to build limits, saving money is.
@SUMRFUN wrote:That is interesting news to know. Since all of the accounts I have listed are at 6 months from the time that I went on my initial app spree. I'm keeping the credit util under 2% because for the longest I have used a debit card when I didn't have credit, an now that I have some credit, I can't mess up anymore or else!. So the magic to getting a credit line increase is to hover around 20% you think?? (showing a little profitability on the account for the issuer).
Yes but it doesn't have to be the reported balance. It can be your intra-statement balance. The banks like it if you pay off your balance, just so long as you used the card before you did.
I won't say that it has to be 20%. They're coy about it, and have suggested it's being within the 10 to 35% range. Even if that's so, that's just Barclays. Other banks might have a different outlook.
