Fico Score Decrease For Paying A $10 Balance TO $0

[Anonymous]

For mos. since April up to June my scores had been steady at 759 up to 762 on EX. I recently had a score increase on my TU and EQ, although I have not checked them recently, the last was 754TU and 745EQ. I had a balance on two cards, $10 on the AMEX BCP and $3299 on AMEX Green (no utilization was factored in) I was suprised to see a 16 points score decrease on my EX report when I checked this morning. went from 762 to 746, after my BCP went from $10 to $0. Now I would understand a slight 5 points decrease would have been better, but 16 pts. (What the h***) I also just recently transferred my balance on the Green to Discover, but it has not reported yet, since my Disco statement cuts on the 4th week of each month. I have no other changes on my report. No collections or any negative. No new inquiries or applications. I guess my question is, once Discover reports the new balance, currently showing overall 0% utilization, to possibly 8% once it reports in two weeks, and individual utilization goes up from 0% to 40%, am I seeing my score dropping even more or would it go to a stable state again once a balance on Discover starts reporting. I guess, i'm fine with it for now, since I am not applying for any cards anytime soon. But just suprised at such a high decrease in score for leaving a 0 balance.

[Anonymous]

A 15-20 point drop is 100% typical and expected for going from AZEO (one revolver with a small reported balance) to all cards reporting $0.  Your 16 point drop falls right in that range.

You'll get back your points immediately the moment one of your revolvers reports a small balance, which sounds like it will be your Discover.

[Anonymous]

Thanks BBS, but what if the individual utilization on that Disco balance goes up to 40% was currently 0%, I just paid down some of the balance on it, bringing it from 3299 to 2400, and will be paying the rest off within the next two mos.

[Anonymous]

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@Anonymous wrote:

A 15-20 point drop is 100% typical and expected for going from AZEO (one revolver with a small reported balance) to all cards reporting $0.  Your 16 point drop falls right in that range.

You'll get back your points immediately the moment one of your revolvers reports a small balance, which sounds like it will be your Discover.

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+1

Earlier this month I accidently let my card I usually keep a $5 balance on go to zero. Once the $5 hit each bureau, I pulled my scores and EX went up 16,  TU 16, and EQ went up 20. 

Before joining this forum, I never knew any of these rules.

[Anonymous]

I'll let BBS continue to guide you, since he is very knowledgeable.  As far as your specific question goes about individual util, some people experience a score penalty when a revolving tradeline crosses 28.99% (assuming all other tradelines are < 28.99%).  Some people do not experience that penalty.  The penalty is typically not much.

Your total utilization will also go up and the breakpoint there is lower: penalties begin at 8.99%.

The important thing to remember is the wisdom captured in the Serenity Prayer.  (Aside from whether a person is religious or not.)  The 40% util is a past decision.  You cannot change that point in the past.  You are correctly working on paying it off in entirety.  Good.   You know enough about scoring to know that any penalties will vanish once the balances come down.  You know that you have no credit needs so that your scores in the next six months do not in fact matter.

Thus:

* Accept the things you cannot change

* Change the things you can

* Wisely distinguish the one from the other

[Anonymous]

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@Anonymous wrote:

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@Anonymous wrote:

A 15-20 point drop is 100% typical and expected for going from AZEO (one revolver with a small reported balance) to all cards reporting $0.  Your 16 point drop falls right in that range.

You'll get back your points immediately the moment one of your revolvers reports a small balance, which sounds like it will be your Discover.

---

+1

Earlier this month I accidently let my card I usually keep a $5 balance on go to zero. Once the $5 hit each bureau, I pulled my scores and EX went up 16,  TU 16, and EQ went up 20. 

Before joining this forum, I never knew any of these rules.

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Glad you are getting the education you need through this forum. I myself have learned so much here and grateful for the amazing forumers that have helped me on my credit build. I guess I would have to wait and see how that balance on Discover would either help, or not once it reports. Crossing my fingers and hoping for it to stabilize soon.

[Anonymous]

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@Anonymous wrote:

I'll let BBS continue to guide you, since he is very knowledgeable.  As far as your specific question goes about individual util, some people experience a score penalty when a revolving tradeline crosses 28.99% (assuming all other tradelines are < 28.99%).  Some people do not experience that penalty.  The penalty is typically not much.

Your total utilization will also go up and the breakpoint there is lower: penalties begin at 8.99%.

The important thing to remember is the wisdom captured in the Serenity Prayer.  (Aside from whether a person is religious or not.)  The 40% util is a past decision.  You cannot change that point in the past.  You are correctly working on paying it off in entirety.  Good.   You know enough about scoring to know that any penalties will vanish once the balances come down.  You know that you have no credit needs so that your scores in the next six months do not in fact matter.

Thus:

* Accept the things you cannot change

* Change the things you can

* Wisely distinguish the one from the other

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This is so nice to read, thank you so much! It does bring things into perspective, and yes, I have accepted the above mentioned. It gives me something to work towards. Again, grateful to all of you, the guidance I have received here has helped me tremendously.

[Anonymous]

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@AnonymousThanks BBS, but what if the individual utilization on that Disco balance goes up to 40% was currently 0%, I just paid down some of the balance on it, bringing it from 3299 to 2400, and will be paying the rest off within the next two mos.

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Well, the biggest factor here is your aggregate utilization change.  It sounds like when that balance was on your charge card, you were at 1% aggregate utilization on your revolvers with that single $10 reported balance.  Also by default this means that your highest individual utilization revolver was also 1%.  Now you're going to your highest individual revolver being at 40%, which crosses 2 thresholds at 8.9% and 28.9%.  On a single card, I'd estimate your penalty there would be maybe 5-7 points at most; It could be less. 

What you really need to figure though is your aggregate utilization change... you're going from 1% to X%.  If X% is < 8.9%, you'll only lose my estimated 5-7 points for the individual card utilization, so once you get back the 16 points from reporting all $0 balances your net score change would be +9-11 points from where you're at now.  If X% falls in the 9%-28.9% range, you'd probably stand to lose around 10 points, more or less creating a wash/break even situation where your scores now likely won't move more than +/- a point or two in either direction.  If X% aggregate utilization is > 28.9%, you'd expect to see your scores drop more from where they're currently at when Discover reports. 

If you have time to figure out those percentages and can report back it would be helpful.

[Anonymous]

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@Anonymous wrote:

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@AnonymousThanks BBS, but what if the individual utilization on that Disco balance goes up to 40% was currently 0%, I just paid down some of the balance on it, bringing it from 3299 to 2400, and will be paying the rest off within the next two mos.

---

Well, the biggest factor here is your aggregate utilization change.  It sounds like when that balance was on your charge card, you were at 1% aggregate utilization on your revolvers with that single $10 reported balance.  Also by default this means that your highest individual utilization revolver was also 1%.  Now you're going to your highest individual revolver being at 40%, which crosses 2 thresholds at 8.9% and 28.9%.  On a single card, I'd estimate your penalty there would be maybe 5-7 points at most; It could be less. 

What you really need to figure though is your aggregate utilization change... you're going from 1% to X%.  If X% is < 8.9%, you'll only lose my estimated 5-7 points for the individual card utilization, so once you get back the 16 points from reporting all $0 balances your net score change would be +9-11 points from where you're at now.  If X% falls in the 9%-28.9% range, you'd probably stand to lose around 10 points, more or less creating a wash/break even situation where your scores now likely won't move more than +/- a point or two in either direction.  If X% aggregate utilization is > 28.9%, you'd expect to see your scores drop more from where they're currently at when Discover reports. 

If you have time to figure out those percentages and can report back it would be helpful.

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Thanks again BBS, I am estimating my aggregate utilization to go from 0% to 8%. I am only allowing a balance to report on that one card (Discover) while I pay all of the balance in the next two mos. I will try to bring the aggregate utilization down further to hopefully 5% if I can before the statement cuts. But if not, that's ok, as long as AMEX or Discover would not scrutinize the large gap in the score change.

[Anonymous]

Gotcha, so your total credit limits are then in the ballpark of $40k?  That would leave your aggregate utilization around 8% based on that Discover balance.  Just making sure we're on the same page here.

If that's the case, you should see the majority of your 16 points come back (at least 9-11 IMO) with only taking a possible penalty related to highest individual card balance (40%) and no penalty related to aggregate utilization.