Back in March my fico score dropped 20 points due to old accounts dropping off. It went back up a couple months later. Now, it just dropped 20 points again. Absolutely nothing has changed this time. 0% utilization 0 hard pulls 5 years for credit age no new accounts and no old accounts dropped off. I do have a bankruptcy that will drop off in 18 months. Anyone have any ideas why the drop again?
First question, where are you getting your score from?
Back in March my fico score dropped 20 points due to old accounts dropping off. It went back up a couple months later. Now, it just dropped 20 points again. Absolutely nothing has changed this time. 0% utilization
If your Fico score dropped 20 points, something changed on your file. It's impossible that nothing changed, as a score is generated based on input data. Different scores = different input data. You mentioned 0% utilization. If your utilization was small (say, 1%-8%) prior and you had a reported balance and just reported all $0 balances, you'd expect to see a score drop due to "no revolving credit use." That drop is typically right around 20 points, which would fit what you just experienced. If you let one of your $0 accounts report a small balance of $5+ you'll see those points immediately return once the account reports that balance to the bureaus.
Just look at your credit report and see the reported balance on the account. If it's $0, you incurred the all zero penalty. If it's anything other than $0 (even $1 would suffice) it was not the all zero penalty that caused your score drop.
It may seem that way, but the way the current algorithm is designed it makes sense. It cannot see history, only a single moment in time snapshot. So, if at that single moment in time all of your balances are $0, it "thinks" you don't use your revolving credit. If you aren't using it, who knows if you can manage it. So those points go away. If you report just a single tiny balance though, the algorithm "sees" revolving credit use and those points immediately return.
So, you aren't losing points for "paying everything to $0" you are losing them because the algorithm isn't seeing any revolving credit use since it has no way of looking at history and just looks at a single moment in time snapshot.
I had no idea paying everything to 0 could cause a 20 point drop. That’s so messed up.
The good news is that the next time a small balance shows up on your report, the points will return.
A lot of people are surprised to find this out, although the "all cards at zero" penalty is one of the things that gets advertised around the forum pretty frequently. It's generally not a big deal, but you'd want to go the extra mile to avoid it when you're applying for credit. The main thing is that it isn't usually something that should make one panic.