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Help Me Understand FICO and it's Peculiarities

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CA4Closure
Regular Contributor

Help Me Understand FICO and it's Peculiarities

In 2012 I had a foreclosure which dinged my credit score badly. After that debacle, I only had one credit card, Capital One. All the otherrs sent me letters that they closed my accounts and asked me to cut my credit card in half even though I was current with those cards. Fast forward to today.

About two years ago I decided to apply for a credit card to see if I would be approved. I was approved for a Discover Card which allowed me to check my FICO scores any time. Since then I added a few gasoline cards and three VISA cards from Chase, Capital One and Citi (Costco).

They said over time that foreclosure will have a lesser effect on my FICO score so long as I paid my credit cards on time and/or paid more than the minimum amount. I have done that. BUT my FICO scores do not increase more than 1 to maybe 5 points tops. If I keep my balances under 1% utilization, my FICO scores actually DROP!

Today my utilizaton is .5% because of my gasoline (Shell, Unocal 76 and Chevron) credit cards which has less than $200 charged on them for any given month. I looked at my Costco FICO 8 score and it dropped from 763 to 760! My Chase FICO score dropped from 749 to 740! How is it that my spending and payments have been exemplary yet my scores are dropping?

I have not applied for any credit because I do not want any more credit cards. I am going to apply for Ford Motor Credit for a new car I want to buy hence the need for a higher FICO score.

12 REPLIES 12
trusty
Frequent Contributor

Re: Help Me Understand FICO and it's Peculiarities

There are a plethora of factors that go into determining a credit score. Sometimes we think that our actions produce linear results, but it's not so simple.

 

If there are more than one accounts reporting a balance, it will skew the score. Try having just one account report a low balance.

 

Ultimately, having a derogatory item report on one's credit will sully the reports somewhat... at least until it falls off.

 

That said, scores in the mid 700's are plenty sufficient to obtain an auto loan, all other things being considered.

Message 2 of 13
CA4Closure
Regular Contributor

Re: Help Me Understand FICO and it's Peculiarities

Thanks Trusty! Since January of 2017 my FICO score across the different ones increased only 8 points. I thought it would increase like +20 points over time.

I am going to test this. I will start using my credit cards to pay for things rather than my debit card!

Message 3 of 13
Anonymous
Not applicable

Re: Help Me Understand FICO and it's Peculiarities

Your scores are already high enough to secure the best rates for auto loans.

 

Although your CC utilization is low, it is possible that the number of cards reporting a positive balance has gone up.  This can hurt your score.  If you want an easy rule for maximizing your score (from a CC perspective) you can think of it as AZEO: All cards at Zero Except One.  Implement AZEO and keep your total utilization at 1-5% and you should be fine.

 

Once you get the car you can relax and not worry about AZEO.  The AZEO strategy doesn't help you build up your score over time.  It just helps you squeeze out some extra points before an important credit application.

 

PS.  Do you have any open loans?

Message 4 of 13
Kree
Established Contributor

Re: Help Me Understand FICO and it's Peculiarities


@CA4Closure wrote:

Thanks Trusty! Since January of 2017 my FICO score across the different ones increased only 8 points. I thought it would increase like +20 points over time.

I am going to test this. I will start using my credit cards to pay for things rather than my debit card!


I don't have a lot of information here, just what you have said, but it sounds like your scores are about as high as they can be at this time. Likely the biggest factor stopping you from reaching the 800s is the Average Age of your Accounts. Also you mentioned looking for a car loan, do you currently have any installment loans? Not having an installment loan is also a big hurddle.   Just by adding one your score can jump by 40 points.

Message 5 of 13
Anonymous
Not applicable

Re: Help Me Understand FICO and it's Peculiarities


@Kree wrote:

Not having an installment loan is also a big hurddle.   Just by adding one your score can jump by 40 points.

Note that people with no installment loans need to do more than just add one.  They need to then promptly pay almost all of it off and still keep it open for five years.  That can be tricky for a beginner to do without a little guidance.

 

If the OP wants to learn more about that strategy, he can read the first 2-3 posts of this thread:

 

http://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Adding-an-installment-loan-the-Share-Secu...

Message 6 of 13
Anonymous
Not applicable

Re: Help Me Understand FICO and it's Peculiarities


@Kree wrote:

I don't have a lot of information here, just what you have said, but it sounds like your scores are about as high as they can be at this time. Likely the biggest factor stopping you from reaching the 800s is the Average Age of your Accounts.

While I agree that the OP's scores are probably about as high as they can be right now, I disagree that the constraint is his AAoA.  Without question, the constraint is his dirty file.  There are people with an AAoA of 2 years that have 800 or near 800 scores, but no one with a dirty file has an 800 score.  On my dirty file I was able to get my TU FICO 08 to 768 and that's where it plateaued with a 4.5 year old 120 day late.

 

OP, not sure if this was mentioned already, but where are you getting your scores from?

Message 7 of 13
Anonymous
Not applicable

Re: Help Me Understand FICO and it's Peculiarities

Didn't realize Chase provided a FICO score, is that with a particular card?

 

Chase does provide a free Vantage Score but that isn't a useful credit score, it's an entertainment score like reality TV.

Message 8 of 13
Anonymous
Not applicable

Re: Help Me Understand FICO and it's Peculiarities

The Chase Slate gives its users a FICO 8 Classic.  I think that may be the only Chase card that does it.  I have three cards with Chase (Ink Plus, Freedom, and Sapphire Preferred) and none of them give me a FICO.

Message 9 of 13
Anonymous
Not applicable

Re: Help Me Understand FICO and it's Peculiarities

CCs that give free credit scores with your card:

 

AMEX Blue Cash Everyday gives free monthly FICO scores from EX

 

Bank of America gives free monthly FICO scores from TU

 

Barclaycard gives free monthly FICO scores from TU

 

Capital One (Cap 1 and QS) gives free weekly Credit Wise scores from TU. If you have a money market accout with them ($50K+) they will also give you a free monthly 3 credit pull.

 

Chase (Freedom and Unlimited) gives free weekly VantageScore 3.0 from TU.

 

CITI give free monthly FICO scores from EQ.

 

Discover gives free monthly FICO scores from TU. If you have the savings account ($25K+) they give weekly reports.

 

Certain Specialty cards also give you data

 

WalMart, for example, gives you a free monthly TU FICO score

 

Hope this helps

 

Y

Message 10 of 13
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