FICO Simulator--When using under 30%, does paying off more really matter?

[Anonymous]

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@Anonymous wrote:

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@Anonymous wrote:

I'm also subscribed to www.freecreditscore.com (by Experian), and the monthly fee is well worth it to me.

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Paying monthly fees for something that is supposed to be free (freeCreditScore.com) sounds strange.  Can you tell us more about what you are doing?

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I found irony in that as well and would like to hear more about it.

[Anonymous]

It sounds like you're a bit of a numbers guy.  There's nothing wrong with that, but keep in mind that a lot of the things you're referencing are simply fluff coming from front-end CMS software.  All of those charts/graphs, simulators, "ratings" (excellent, good, poor, whatever), numbers turning "red" at a certain percentage etc. aren't really meaningful. 

I think CGID kept things nice and simple above where he touched on never missing a payment and keeping utilization low.  Keep in mind that "usage" is not the same thing as a "reported balance."  You talked about keeing "usage" being 30% or "using" 50% of your limit, when usage is not a factor in FICO scoring.  One can "use" 100% of their limit, even 200% or greater (if they make multiple payments throughout the month) and still report a balance that comes in at (say) 5% utilization.  

If you're currently at ~25% aggregate utilization, taking it down to below 8.9% reported aggregate utilization could mean an increase of 15-20 points on your FICO 8 scores.  Number of cards/accounts with balances can play a role here as well and also the individual reported utilization on your highest utilized card.

I don't think you go into it in your original post, but what do you have going on with your file in terms of adverse payment history?  Your scores are suggestive of issues there, so I'm curious what types of negative items you have, how many and how old they are?  

I agree with the others that your AoYA and AAoA drop caused temporary adverse impact to your scores.  It sounds like your AAoA will be back to where it was in 5 months.  What was yoru AoYA prior to your latest new account?  Whatever the answer is to that question, you'll be back there in that many months.  Only time will fix those factors, but it doesn't sound like it should take all that long. 

[Anonymous]

The monthly Experian score is free, yes. The $24 a month is for all 3 Bureaus once a month, as well as unlimited Experian scores and reports. It also allows the trackers/planners/simulators, even though they're not the most accurate. There's also identity theft insurance (covering up to a million bucks) included in the membership. I've definitely gotten my money's worth out of the site, just by getting all these day-to-day details to compare and analyze when forming my own theory on the FICO algorithm. So I'm ok with the fee for now, at least until I get this under my belt. 

[Anonymous]

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@Anonymous wrote:

It sounds like you're a bit of a numbers guy.  There's nothing wrong with that, but keep in mind that a lot of the things you're referencing are simply fluff coming from front-end CMS software.  All of those charts/graphs, simulators, "ratings" (excellent, good, poor, whatever), numbers turning "red" at a certain percentage etc. aren't really meaningful. 

I think CGID kept things nice and simple above where he touched on never missing a payment and keeping utilization low.  Keep in mind that "usage" is not the same thing as a "reported balance."  You talked about keeing "usage" being 30% or "using" 50% of your limit, when usage is not a factor in FICO scoring.  One can "use" 100% of their limit, even 200% or greater (if they make multiple payments throughout the month) and still report a balance that comes in at (say) 5% utilization.  

If you're currently at ~25% aggregate utilization, taking it down to below 8.9% reported aggregate utilization could mean an increase of 15-20 points on your FICO 8 scores.  Number of cards/accounts with balances can play a role here as well and also the individual reported utilization on your highest utilized card.

I don't think you go into it in your original post, but what do you have going on with your file in terms of adverse payment history?  Your scores are suggestive of issues there, so I'm curious what types of negative items you have, how many and how old they are?  

I agree with the others that your AoYA and AAoA drop caused temporary adverse impact to your scores.  It sounds like your AAoA will be back to where it was in 5 months.  What was yoru AoYA prior to your latest new account?  Whatever the answer is to that question, you'll be back there in that many months.  Only time will fix those factors, but it doesn't sound like it should take all that long. 

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That statement I bolded is unsettling. I've never missed a payment on anything in my life...I have zero adverse/derogatory items on my credit report and always have.

So based on that guess, it sounds like you weren't quite sure why it would drop so drastically. Any other theories, now that I answered your questions on delinquency?

Before opening all these new ones, my AOyA was 4...if counting the debt consolidation loan. In terms of credit cards, it was 21...so that won't go back up for another year or so. I'm also still wondering if auto loans and/or consolidation loans count as the "youngest account." This would mean that if I trade/refinance my car, I'd run into the issue again.

If they're not factored as AOyA, it means I've lowered it from almost 2 years to just a few months, which could take a while to recover. Does that really impact the score as much as AAoA? Does it look like I'll have to wait another year to get above  700 again?

[Anonymous]

As a general rule, if one possesses a profile that's clean (no negative items present) and their utilization is low, it's almost impossible to not have scores in the low-mid 700's.  Many people with 6-12 months of credit history that only have 1 account debut with a score in the low 700's and it only grows from there.  Any time I see slightly sub-700 scores it means to me that either utilization is high or there are some sort of negatives present.  Dramatically sub-700 usually means the problem is related to both issues.  You stated early on that your utilization was low, so that said to me that some sort of negatives must have been present.  You're now saying there isn't, so I'm not really sure where to go from here.  If you wanted to you could take the time to list out more information on your credit report (all your accounts with their balances/limits, ages, etc.) or perhaps some of the other members here could offer suggestions as to why your scores are pretty low based on the mostly positive profile information you've provided thus far.

All accounts are factored into your age of accounts factors.  It doesn't matter if it's a revolving account or loan.  So yes, a new loan would drop your AoYA to 0 months.  When you said it was previously "4" I'm assuming you meant months and not years, but can't be sure without clarification.  Obviously, there'd be a huge difference depending on which it is.

How many inquiries do you have within the last 365 days on each bureau?

[Anonymous]

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@Anonymous wrote:

As a general rule, if one possesses a profile that's clean (no negative items present) and their utilization is low, it's almost impossible to not have scores in the low-mid 700's.  Many people with 6-12 months of credit history that only have 1 account debut with a score in the low 700's and it only grows from there.  Any time I see slightly sub-700 scores it means to me that either utilization is high or there are some sort of negatives present.  Dramatically sub-700 usually means the problem is related to both issues.  You stated early on that your utilization was low, so that said to me that some sort of negatives must have been present.  You're now saying there isn't, so I'm not really sure where to go from here.  If you wanted to you could take the time to list out more information on your credit report (all your accounts with their balances/limits, ages, etc.) or perhaps some of the other members here could offer suggestions as to why your scores are pretty low based on the mostly positive profile information you've provided thus far.

All accounts are factored into your age of accounts factors.  It doesn't matter if it's a revolving account or loan.  So yes, a new loan would drop your AoYA to 0 months.  When you said it was previously "4" I'm assuming you meant months and not years, but can't be sure without clarification.  Obviously, there'd be a huge difference depending on which it is.

How many inquiries do you have within the last 365 days on each bureau?

Experian - 8

Equifax - 3

Transunion - 1

That's true, I meant four months. So the AoYA should be back to where it was already. After checking again, I now see it was only three months in December (when well over 700), so it's already back to that point. I guess that eliminates the theory that it's AoYA making the difference.

And yes, like you said, I've followed the regular advice: Keep utilization under 30% (really 28.9%) and never miss a payment. Still, it's staying in the mid-600s, negating all the work I did in 2018. It seems like I'm a negative "exception" to the rule with no acceptable reason why...this is why the basic fundamental approach hasn't worked, and I've been compelled to break down all the numbers. 

Except for the inquiries, the only other possible factor is AAoA...since it's 23.9 months now, it could still be considered under 2 years (even though the 'fluff' reports round it up). In one month, then, it will be over 24 and I'll see how big a difference that makes. It doesn't seem like it should be a full 50.

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[Anonymous]

There’s definitely something up with your profile. Your scores are around mine and mine are being held back by major things. TU is being held back by my 2010 Chapter 7 and EQ and EX are being held back by student loan lates and a repo in addition to my Chapter 7 and all three have a bunch of new accounts (every card in my sig except Capital One which is almost 5 is less than a year old and the last 6 were December to February additions and my EX already recovered to 670). 

My AAoA is > 2y but my understanding is that’s 10 points at the most. 

[Anonymous]

I'm sure an AAoA shift from 23 months --> 24 months will help some, but AAoA is not a scorecard assignment factor the way AoYA and AoOA are, so gains here won't be huge IMO.  I think the 10 points estimated above if anything is on the high end.

I agree that there's definitely something odd regarding your file.  Have you pull hard-copy credit reports from all 3B?  If not, I'd suggest doing so.  There could be something like a 30-day late [incorrectly] reported on one of your accounts that perhaps a CMS or non-hard-copy report isn't showing for whatever reason. 

Have you played with having your aggregate utilization at different levels?  For example, 5%, 15%, 35%?  Each of those points puts you clearly between thresholds, which is why I asked.  I would think in most cases you'd see around a 15 point shift give or take to your scores when you cross a threshold point, but if you've done any testing on your own you'd have a better idea of the exact amounts on your profile.  That being said, a shift from > 30% utilization down to ideal (under 8.9% aggregate) could easily mean a 30+ point gain.  Of course number of accounts with balances, highest individual utilization card etc. come into play here as well, although aggregate utilization is always King to those.

[Anonymous]

There are very certainly no delinquencies on any of the bureaus; I have access to all of them on other sites as well.

This is getting extremely frustrating...having worked to do all the "right things," have spent many hours trying to research this, and for no apparent reason, they're acting as if my profile is completely different and all my diligence was a huge waste of time and energy. I'm on the phone with Experian right now to see if I can get anything out of them.

Regarding aggregate utilization: I thought 8.9%-28.9% was all one range...and yes, it's always stayed in there. I've played obsessively with the utilization percentages, both aggregate and individual. But in my understanding, 5%, 15%, and 30% are not specifically thresholds.

The only other things that changed since the score was good (besides the new accounts & inquiries):

- The number of accounts with a balance above zero: Went from 2 to 5

- Number of individual accounts with above 28.5% went from 1 to 2

- The highest-balance account went from around 50% to the "over 88.9%" category (I maxed it out completely with a balance transfer)

[Anonymous]

Having a maxed out card is probably costing you about 20 points. I suspect the damage is actually higher than that but there aren’t enough DPs on it. I have a feeling that on a clean scorecard this is far more damaging than that.

If you have 10 or less cards, you’re getting a penalty for more than 50% with a balance as well.