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Explain the madness!!!

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Anonymous
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Explain the madness!!!

I had FICO scores of 765, 781, and 804 (Eq, Exp, Trans) respectively in December 07. My total revolving balance was around $900 with total credit limits of 52K. Now in February I have zero revolving balance, same total credit limits and my score went down to 742, 757, 790. This scoring system is soooo flawed. Granted my scores are still good, but explain to me how zeroing your balance can lower your score, hence lower your creditworthiness. Totally ridiculous, the difference b/w December scores and February scores would cause an increase in mortgage rates almost a tenth of point. It obvious to me that the FICO calculations are flawed and have multiple personalities. You do plan A at time X its good, you do plan A at time Y its bad. And who knows what time X or time Y is???
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Anonymous
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Re: Explain the madness!!!

far..............I am with you 100%. Totally ridiculous. Evidently, FICO likes to see a small balance (between 3-5%) on 2 or 3 of your revolving accounts. They do not like to see - and they penalize you -if you have zero balances on everything.  I 'spose having a small balance shows them you are good at handling and managing credit
 
Yes, you are penalized for paying your accounts in full.  .
Message 2 of 4
Anonymous
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Re: Explain the madness!!!

It's all a big game to the CB
Message 3 of 4
Anonymous
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Re: Explain the madness!!!



farblish wrote:
I had FICO scores of 765, 781, and 804 (Eq, Exp, Trans) respectively in December 07. My total revolving balance was around $900 with total credit limits of 52K. Now in February I have zero revolving balance, same total credit limits and my score went down to 742, 757, 790. This scoring system is soooo flawed. Granted my scores are still good, but explain to me how zeroing your balance can lower your score, hence lower your creditworthiness. Totally ridiculous, the difference b/w December scores and February scores would cause an increase in mortgage rates almost a tenth of point. It obvious to me that the FICO calculations are flawed and have multiple personalities. You do plan A at time X its good, you do plan A at time Y its bad. And who knows what time X or time Y is???

Hi farblish, and welcome to the forums!
 
The logic as to why having all zero balances hurts your FICO score is pretty straightforward.  FICO rewards those who know how to use their credit wisely and appropriately.  If you have $0 on all your CCs, all FICO knows is that you have credit available to you, but there is no indication that you know how to use it wisely, because it appears you are not using it at all.
 
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