FICO score dropped - what happened?!

[Anonymous]

Two weeks ago I signed up Score Watch and got my first FICO score.  Since then, I have paid off my 3 credit cards, received increases in my credit limits from all 3, and contacted the credit bureaus to update some information.  I had a bankruptcy 6 years ago, but some of the creditors that were included in the bankruptcy had my account listed as bad debt/collections.  All 3 credit unions updated this information to show that the creditors listing me as bad debt/collections were indeed included in the bankruptcy.  One of the credit unions actually deleted the creditors that were listed as bad debt.  I felt really good that I was finally on the right track and anxiously awaiting my first credit alert update.  Well, it came yesterday and my score dropped 13 points!  I don't understand.  Here is what the report said:

Your FICO score has dropped; your interest rate on a new 48 month auto loan may be more expensive.  I do not have a new auto loan.  I purchased a new auto last year in July with a 60 month term and have not changed it.  The report also said:

There was a change on your credit report that lowered your score but did not trigger an alert. For example, the balance on an account might have increased enough to lower your score, but not enough to trigger a balance increase alert.  (How could this happen when I paid off all my debts?)

You moved from one category of credit users to another as time passed. For example, you may have transitioned from the category "consumers with a new credit history" to the category "consumers with a two- to five-year credit history". As a result, your credit report is evaluated differently, causing a slight change in your score. The good news is that moving between categories like this usually offers you the potential to reach a higher FICO score in the future.

I don't understand what any of this means.  I went from a 662 to a 649, not good news

[Anonymous]

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vicki wrote:

Two weeks ago I signed up Score Watch and got my first FICO score.  Since then, I have paid off my 3 credit cards, received increases in my credit limits from all 3, and contacted the credit bureaus to update some information.  I had a bankruptcy 6 years ago, but some of the creditors that were included in the bankruptcy had my account listed as bad debt/collections.  All 3 credit unions updated this information to show that the creditors listing me as bad debt/collections were indeed included in the bankruptcy.  One of the credit unions actually deleted the creditors that were listed as bad debt.  I felt really good that I was finally on the right track and anxiously awaiting my first credit alert update.  Well, it came yesterday and my score dropped 13 points!  I don't understand.  Here is what the report said:

Your FICO score has dropped; your interest rate on a new 48 month auto loan may be more expensive.  I do not have a new auto loan.  I purchased a new auto last year in July with a 60 month term and have not changed it.  The report also said:

There was a change on your credit report that lowered your score but did not trigger an alert. For example, the balance on an account might have increased enough to lower your score, but not enough to trigger a balance increase alert.  (How could this happen when I paid off all my debts?)

You moved from one category of credit users to another as time passed. For example, you may have transitioned from the category "consumers with a new credit history" to the category "consumers with a two- to five-year credit history". As a result, your credit report is evaluated differently, causing a slight change in your score. The good news is that moving between categories like this usually offers you the potential to reach a higher FICO score in the future.

I don't understand what any of this means.  I went from a 662 to a 649, not good news

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Basically you can see a FICO decrease when you movefrom one category to another.  Basically it means you running with the big dogs and that score means more than the older score.  Sometimes a BK being removed can result in a lower score as you are no longer being classified with others who have a bk on record.

HTH

[Anonymous]

So is that good in the long run?  Maybe I should have just left things alone.  My BK wasn't removed, I just had them change some of the creditors to state that they were included in the BK so some collection agency couldn't buy them and try to collect.  Also, I thought it would look better that these debts were all included in the BK instead of being addl debts that I just didn't pay.  Will it take years again now that I'm running with the "big dogs" as you put it?  Boy, do I hate this game!

[Anonymous]

Basically as your credit history ages, expectations change.  It simply means that the likelihood of default is calculated by a different standard.  Whereas before you were being compared to people with a history of lessthan two yearsm you are now being compared the group that has two or more years of history.  Take heart, the more your history ages you will regain those points and more.  Many mortgage lenders require a minimum credit history to qualify.  Just let things age and continue to pay on time.

[Anonymous]

Thanks again for the info.  That makes me feel much better.  It's not like I'm buying a house or anything right now, but good to know where I stand.  At least I'm being "promoted".

[Anonymous]

You were in a pool with some algae and slime, but now you're in a nicer pool.

Catch is, your bathing suit? It was great for the old pool, but it looks a bit dowdy when compared with those of the nicer pool you're now in.

[Anonymous]

great pool/suit analogy - people like you help keep us sane here in this creditopoly alternate universe

[Anonymous]

Your comparison of people with lower credit scores to algae and slime is a good example of why the credit score is so important to people like me. Yesterday I had a credit score of 762, and could look anyone in the eye. Today my score has plunged 100 points and I am being compared to slime. And yet I'm still the same person with the same credit history. Very strange.

[Anonymous]

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minonda wrote:

Your comparison of people with lower credit scores to algae and slime is a good example of why the credit score is so important to people like me. Yesterday I had a credit score of 762, and could look anyone in the eye. Today my score has plunged 100 points and I am being compared to slime. And yet I'm still the same person with the same credit history. Very strange.

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I've heard of this happening before.  First, lets just make sure we are comparing the same reports from 100 points ago.  You saythat you are the same person with the same credit history.  Could some old, long-forgotten good account have fallen off your report resulting in your report being reaged?  Have you opened up several new lins of credit with the same result only to your average credit age?  Have you pulled the report and really eyeballed it to make sure nno new derogs are showing?  Is there a card with a zero balance (or more than one ) thats been sitting in mothballs for a while with no activity?  You don't have to only look at what's there but what's not there today.  Lastly, are you using a genuine FICO score and not a TU or Fico score? 

Please let us know I'm curious about a 100 point drop myself.

[Anonymous]

No wonder I feel I'm fighting an uphill battle! Apart from the information I gave in my reply to you in my post above, here are some more answers:

I haven't opened any new lines of credit in about six months. There are no old accounts with a zero balance because before I understood that I was being judged by debt to credit ratio, I closed all accounts after they were paid off. I realize now that that hurt my credit standing (which seems idiotic to me) but that also means that I have no open accounts that have been sitting around with zero activity for a long time. It's only been in the past year that I've been leaving accounts open after they're paid off and not lowering my credit limits when I apply for new credit.

Does this provide any clues?