FICO score dropped 7 points but nothing has changed in 1 year with usage or on-time payments

[Realist]

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@oldrocker1967 wrote:

Hi Everyone:

Hope somebody could explain this, as it is upsetting even if it were a drop of 1 point.

Every month I use the two credit cards I have and spend 1 percent of the credit line and pay in full when the bills come.

Every month I pay a bit more on the car lease loan.

I have not been a minute late on any obligation in 10 years, if not more.

Normally the only down-turn is when I pay off the car lease (every 3 years) and lease another. The score drops.

The formula I have used has worked well as I was 801 on FICO the past few months until today.

With the drop it placed me from Exceptional to very good.

What did I do wrong? I have never deviated from the above (there are no other obligations) .

In FICO's mind something freaked out, but why today and not all this time?

Thank you for any help and all be well and safe,

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Your credit score by default is always in a state of flux.   I'm concerned that your concerned with a mere drop of a small amount of points.  I find this to be too much focus on the score.  I don't care if the score drops a dozen or two.  It often pops right back up.

How thick is your credit card profile?  By this I mean how many accounts do you show as active, and how many do you show as closed over a ten year cycle?  How many recently feel offer your rotating ten year cycle of credit?    While some will say a solid three credit card profile is adequate, I would agree it's effective, but nothing replaces mass.  Mass moves mass, physically, and it would seem, by electrical inputs.  By this I mean, if you have a very thick credit profile, both online and offline, I suspect everything weighs very differently.  When you want to identify someone, you want the largest quantity of information that helps to identify them.

Three credit cards paint a nice picture.  Twenty or thirty paid off and successful loans, along with twenty on time paid credit cards, paints a "I'm trusting that guy/gal with my money" profile.

[oldrocker1967]

Thanks for response.

One comment you made is not in the best of taste, as often when something happens to somebody else (and not the individual) they do not see it through their eyes. It is easy to say something from the other side. In all honesty that was in poor taste.

Dropping from 814 to 807 would be less bothersome than from the Exceptional to Very Good Range (which happened to me).

Secondly, in any situation one (I would hope) would want a definitive answer, since the circumstances are the same. This could be why medication stopped working for the neighbor that takes the same dosage for 9 years, or the drop in a college grade when the student achieved 90 percent on every test and never missed a class.

Here once again, is all I can provide:

2 credit cards, used at 1 percent per month and paid in full each month a few days apart. I believe one of them is 15 years and one 12.

1 Car Payment, paying a bit more than the lease amount.

No more obligations that are reported to the credit bureau.

In the past 10 years no closing of credit cards or opening.

In the past 10 years 3 car leases paid after 36 months (always least 3 years).

Score drops typically 52-55 points when the loan is shown paid in full.

I lease a new vehicle after 36 months.

Score goes back up, as all payments on time and 1 percent usage.

Thank you for your reply from last night

[JoeRockhead]

I know it can be disappointing not finding a definitive answer as to why there was a minimal point loss when seemingly nothing changed. A couple of things though. First, there could have been a slight tweak to scoring algorithms by the reporting bureau, which they can tailor to an extent to better suit their own preferences, and it's not something they would disclose. This is regularly demonstrated by the fact that aside from scores of 850 across all three bureaus, it's not at all uncommon for all 3 of them to differ slightly from one another. 

Most importantly, the rating labels of Exceptional, Very good, etc... are nothing more than a psychological implement the industry has imposed on consumers. Others can chime in with their theories as to the reasons why. The Important thing to remember is that although their "rating" system has "downgraded" you from exceptional, to very good, nothing has changed the fact that you currently still have excellent scores. The reality is that people with 780+ scores will get all the same best rates and offers, as the people with 800+ scores do. 

While it can be frustrating, try not to let the rating labels get in your head because they essentially mean nothing.   

[oldrocker1967]

Thank you Joe for such an articulate and understanding post to my question and concern.

It would be superlative if one day there would be full disclosure for any changes up or down (from any credit bureau) and no penalty for paying off a car loan (afterall you met the obligation).

You are a true credit (no pun intended) to the Fico Forum.

All the best for a great weekend!

[DebbsSeattle]

I am making a reply, not as an expert, but as a cohort striving to once again reach that 800 club you are member to. I have worked in auto sales and have seen really good credit and really bad credit (as in "have you ever paid a bill on time?"). It was more often that the good credit folks were always concerned they would not be approved and the bad credit folks could not understand how the 100% down payment purchase plan was the only way they were going to drive off in a new car.

I have been working like a mad woman since October to take control of my financial picture with the goal of paying off my debt. It is my only flaw in my bureaus..."high utilization". I'm otherwise perfect. I am on the verge of the tipping point where my scores should report in the 760-780 window (I hit 757 yesterday on one bureau). So I can fully appreciate your dismay at having a score drop below that prideful 800 mark. I can honestly tell you that I have never had a customer get declined on any car deal with a 780 or better with only one exception of a high score, high income earner, financed to the hilt, who had to speak to the underwriter for proof of income and then made the mistake of saying they were buying a new car before they filed for bankruptcy. Done. Game over. Hasta La bye bye.

I have found that some dips are clearly linked to a specific transaction like seeing a balance transfer hit the new card that was zero before the balance transfer. Some point pickups are obviously tied to one balance decreasing by $2,000 on one card. Many other point ups and downs are just not clearly discernible as to why/what/when/how. I can get a 4 pt. decrease on Tuesday with no reason apparent and then pick up 5 on Thursday with also no clear reason. Just give it a month to see if it just works it's way through.

Now, my suggestion from what all these gurus here have been teaching me. It is all about when your cards report and what they report. Having a balance, any balance, on 50.000000000% or more of your Credit Cards has a points penalty attached. For you, with only holding two (2) credit cards, that means you will incur this "score penalty" if either one of your cards reports a balance.

The other thing I have learned from them...when I reach the point of having no balances on any of my cards, I should look to optimize my score by letting all my cards report zero except one. You may see the acronym of "AZEO" associated with this practice here on the boards. We get a point boost by doing this, when the balance we allow to report is less than 8.9% and ideally in the 1%-<5% range of that cards total credit limit.

Even not seeing the specifics of your file, it would be safe to assume that if you acquired one more credit card and always allowed it to naturally report a tiny balance while having the other two report ZERO, you would see a points increase beyond your 800 scores. I have seen specific points increases in the 12-15 range noted by fellow myFico forum members related to this behavior.

I think you can turn this around and make this a learning moment that will allow you even more score pride. Read up on the AZEO behavior for your own due diligence, select a third highly valuable card for your lifestyle (May I say I am loving my Amex Blue Cash Preferred for 6% cash back on groceries and 3% of fuel...That is a nice budget saver reward.) and enjoy a new higher score to boot!

I look forward to joining you in the 800 club and no doubt will be even more prideful of that score myself.

Cheers.

[oldrocker1967]

Thank you for the information and I hope you achieve all goals in 2025 and onward.

One thing I do want to emphisize (because thsi has been brought up by those kind enough to answer the thread) about the credit bureau getting a report of zero balance or some.

Since I use the same 2 cards every month, the same one percent credit limit, and pay the same time, the report to the bureaus should be consistant of showing a balance or not.

For instance I do not have one month pay ABC the 3rd but the next the 20th. 

With the regimented 1 percent, pay in full, pay on-time I have used, I had not previously seen a decrease (excluding every 3 years paying the car lease off).

Thanks and have the best of weekends!