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

[Anonymous]

Good morning, hope everyone is doing well. As promised BBS, I have an update. I had requested Discover to do an off cycle reporting and it reflected today, EX score went up 6 pts. My utilization went from 0% to 7% . I am not sure of the other two. But prior to this update, here's how the no balance reporting affected all three. 

EX from 762 to 746 (now at 752)

TU from 754 to 738

EQ from 745 to 723 (ouch)

My EX credit works won't give me an update until 7/23 for the other two, and I just used my 7 day refresh from CCT. I was hoping it would have brought me at least 10 points of what I lost, but oh well, it is what it is and I'm sure it would recover in the next month or two (I hope) Thanks again for all the advice BBS and to everyone who chimed in. 

[Anonymous]

Hey Clark, thanks for stopping back in with the update. 

If you only saw 6 of the 16 points on EX come back when you just had a balance report, it means your score is taking a 10 point hit elsewhere.  The only way you'll be able to tell where is by comparing your credit report line by line before you took the 16 point hit to the version you have now where your score is taking a 10 point hit. 

If a utilization change from X --> Y causes someone to lose 16 points, a utilization change reversed from Y --> X will result in a 16 point gain. 

If you indeed made the above change and your net gain was only 6 points, it means that something else during this time caused a 10 point drop.

[Anonymous]

Thanks BBS, it probably would require a close eye on determining where the 10 pt drop came from since nothing else seemed to change on my reports that I can think of except that the individual utilization with Discover going from 0% to 40% perhaps they dinged for that as well since on the report, they seem to highlight the 40% in red? Everything else on the report seems clean and it's really hard to decipher where the missing 10 pts. went. But I will review the report again and see if I could find anything.

Reviewed the factors helping and hurting my profile as well, and nothing seems to have changed as well. 

[Anonymous]

Highest individual revolving utilization is a scoring factor that could certainly be at play here.  If someone has their highest revolver reporting a single-digit utilization percentage and takes that to 40%, it could result in a score ding.  Many people don't see a ding in crossing the 8.9% threshold on an individual line (so long as aggregate stays ideal) and many don't in crossing the 28.9% point either.  Some (I am one of them) do though.  Typically this drop isn't substantial; Mine was around 5 points.  I don't think 10 would be out of the question though depending on the profile in question. 

[Anonymous]

Thanks again BBS, perhaps my young credit history was the bigger factor here. On top of the sudden increase in utilization on one card. So, perhaps there were some other things that triggered these penalties when I let that balance report to 0. It really us hard to predict which maybe causing it. Hopefully it gets restored in the next couple of months.

[SouthJamaica]

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@Anonymous wrote:

Thanks BBS, it probably would require a close eye on determining where the 10 pt drop came from since nothing else seemed to change on my reports that I can think of except that the individual utilization with Discover going from 0% to 40% perhaps they dinged for that as well since on the report, they seem to highlight the 40% in red? Everything else on the report seems clean and it's really hard to decipher where the missing 10 pts. went. But I will review the report again and see if I could find anything.

Reviewed the factors helping and hurting my profile as well, and nothing seems to have changed as well. 

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Going to 40% on 1 card could easily cost 10 points, all by itself.

[Anonymous]

Thank you SJ. I was doing some reading on EX website and did find some articles highlighting that each card should not go over 30% so I guess that's what prevented the other 10 pts. from coming back.

[Anonymous]

I would say that's probably the issue.  Taking that 40% balance down to 28.9% or below would likely bring those 10 points back.

Just be careful looking at the statements provided by the bureaus, credit monitoring software, etc.  I know above you referenced something "red" provided by some source, suggesting red=bad.  While this may be the case, it's important to quantify these things.  A lot of CMS software uses pretty fluff charts/graphs/colors to try and get a point across, but many times the point doesn't impact score.

The easiest example above would be the highlighted under 30% recommendation by Experian.  The actual number you'd need to get below is 28.9% and if you're talking interest being added in I'd say 27% is probably a "safe" number... but even with no interest it would be 28.9%.  If you went by the highlighted statement you have above and took your 40% card down to say 29.5%, in your mind (and most would believe) you'd be below their recommendation.  The result would be zero gain to your score though, as all decimals are rounded up.  Thus, you'd be at 30% utilization on that card, which is not below 30% of course, meaning you would not cross the necessary known threshold for a score change.

[Anonymous]

Thank you BBS, By August that balance is going from 40% to 23%. I am going to put another 1K towards that, so I am optimistic that some points would come back (hopefully)

But kindly confirm that I calculated it correctly, pretty please

1380 (projected balance after August 10) /6000 = .23 * 100 = 23%

Thanks so much BBS and SJ for all your help

[Anonymous]

That is correct.

$1734 would be 28.9% of your limit, so once you're paid down to that amount you likely wouldn't see any score increase from paying it down further, unless that pay down caused your aggregate utilization to drop across a threshold at some point.  There may be a profile or two out there (maybe not, though) that benefits from a single card going from 9%-28.9% to 8.9% or below.  That point for you would then be $534. 

Basically, from an individual card utilization standpoint, you'd likely see all the gain you're going to get once you get to $1734 or below, with an ever so slight chance of seeing a couple of more points in bringing that balance down to $534 reported or less.  The $1380 balance that you're planning on will more than likely yield you the maximum amount of points you can get from highest card with a balance being in an acceptable place.