FICO Experts help!! history dropping, score dropped for no reason, help with utilization

[cl33]

I will pull the hard copy EX and TU reports and will list all accounts with dates opened. I was allowed to open a card (it was a parent test) in high school and had small cards in college. I am afraid that the majority of accounts were opened around the same time, which means they will drop all at once too. Now I am concerned.  

I was curious if that is why my score dropped in Dec/Jan from 720-707 to 690.

We will have a mortgage loan this year and were planning to look for a car in Dec (purchase in 2018), mine has been paid off for a while. Other than opening new lines of credit every 1-2 years, how do you prevent a huge drop going forward? 

[cl33]

He is a LO. I explained that we weren't ready to do the official pre-approval process because I wanted to improve FICO scores. I told him I had a drop from 720-707 to 690. He explained that there's a difference in scoring models and offered to look for me. I am not certain if it was a hard inquiry, but I will certainly ask (I hope not.) 

Thank you for letting me know that my score may be affected. Out of curiosity, why does the score drop last 365 days - understanding of course that buying a home is a huge financial commitment. I can see how it'd be set up that way to protect consumers and lenders.

[Anonymous]

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@cl33 wrote:
 

I am still focused on improving my score and reducing the utilization. The 75% is obviously the first concern. It is high because we transferred balances to it for the 0% interest. I was planning to pay off the 2 small balances so that they are zero. I was considering transferring some from the Citib to BofA to reduce the 75%, but it may make sense to leave it alone and just focus on paying down 75%. 

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I would not dismiss your idea of paying off the small balances.  The FICO mortgage models actually like it a lot when they see multiple credit cards with a $0 balance.

Is the following a realistic goal?

AX card (currently at 29.15% util):

      Pay down to < 28.9%

BOA and Chase cards (currently with fairly small balances)

      Pay down to $0

Citi card (currently at 75% util): 

      Pay down to < 48.9%

That might be the sweet spot, if your funds are limited.  But even better would be lowering the Citi and AX cards both to under 28.9% (while still paying the other two cards to $0).

A final recommendation would be to make sure that you are definitely paying at least $3 more than the minimum payment on each card.  The reason are complicated, but it's easy to do and will begin to establish a history for yourself as a person who always pays more than the minimum payment.  People who carry a balance and who also often make only the minimum payment have been shown to be far riskier than those who never carry or who always pay more than the MP.  And mortgage lenders now have the tools to identify such people.

[Anonymous]

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@cl33 wrote:

I will pull the hard copy EX and TU reports and will list all accounts with dates opened. I was allowed to open a card (it was a parent test) in high school and had small cards in college. I am afraid that the majority of accounts were opened around the same time, which means they will drop all at once too. Now I am concerned.  

I was curious if that is why my score dropped in Dec/Jan from 720-707 to 690.

We will have a mortgage loan this year and were planning to look for a car in Dec (purchase in 2018), mine has been paid off for a while. Other than opening new lines of credit every 1-2 years, how do you prevent a huge drop going forward?

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It looks to me like you might be buying your house as soon as 60 days from now.  If so, consider my question about Age of Oldest suitably modified.  That is, instead of looking to see what your Age of Oldest will be in November, look to see what it will be on May 1 (again assuming that everything falls off at exactly 10 years after closing.)

If you were to complete the purchase VERY soon (in the next 30 days) then the hard inquiry your friend did will have no effect.  The score harm for mortgage inquiries does not begin until Day 31.  If you buy the house in (say) early May, you should assume that when they do final underwriting the score harm will already be there.

The way to prevent score drops due to the Age of Oldest Account factor is to tend to avoid closing a credit card if the card is one of your oldest and it doesn't have an annual fee.  Quite to the contrary, you should regard such a card is a jewel to be preserved, and make sure that you make a purchase on it once every six months, so that the issuer does not close it due to inactivity.  As you can see, once an account is closed, the clock starts ticking and it will eventually fall off your report.  You are not alone: a lot of people have had the experienc of their Age of Oldest going from 30 years (a CC opened in college and later closed) to 5 years.  It isn't a good thing. 

Opening 1-2 accounts each year is absolutely not needed.  The important thing is to prevent old open credit cards from being closed, and also to make sure that you have a decent total number of accounts.  Six accounts total is probably fine though more is fine too.  It's also great to have one open installment account, which your mortgage will certainly qualify as.

[cl33]

I cannot tell you how much I appreiciate your help!!

We found one house that we are interested in, but are also planning to see another this weekend. We won't base our decision solely on the 30 day rule, but it is helpful to know (a reminder that if we like the house, we should move forward.) We've owned a home before, so the LO and I talked through conventional terms/options, etc. I gave him our ss# and base salary and we talked ball park numbers from there. 

I will send the age of accounts to you shortly. I purposely closed accounts when I was younger not realizing it would hurt me. Ugh! Until recently, we only had 2 major credit cards that we used. I recently started using the BofA card because it has been dormant for 2 years. I will remember to do something every 6 months. We opened Citib and AX to earn points and because they were 0%. We have a system of using one for gas/grocery and the other for vacations, etc. We pay in full when we can (small balances were zero as of Friday) and always pay over the min amount due. That is helpful to know that if we need to shift funds for something else $3 over is the sweet spot. 

I like having different types of accounts - major credit card, store card, furniture cards and car payment. I haven't had a car loan in a while and am hopeful that will benefit me, esp considering some accts are dropping. 

Let me pull the dates - age of accounts