Help me understand 13pt TU drop

[Anonymous]

My TU FICO score dropped 13 points as of mid-Feb and I would like to understand the reason.

Stats/card as follows:

- BoA Cash Rewards, open May 2018, $13700 CL, reported balance increased from $133 to $180 but PIF during the month (<2%)

- Discover IT, open May 2018, $1500 CL > $2250 during the month. Reported balance increased from $0 to $71 (<5%)

- Amex Gold, open August 2018, reported balance increased from $45 to $51 but PIF during the month

Only 2 hard pulls across CRs and no new inquiries during the period, 100% payment history, no derogatory marks. I never keep a revolving balance.

TU FICO: 726 to 713

EX FICO: 724 to 722

I am assuming the reason could be that I went from 50% (1 revolver) to 100% (2 revolvers) of credit cards reporting a balance?  However, I was under the impression that there'd be no difference betwween those to cases and that the threshold is "less than 50% reporting"?  In other words, the AZEO does not work for me as long as I only have 2 revolvers.

Any other good suggstions from the experts? Re-bucketing/categorization?

Thanks!

[Anonymous]

The scoring factor you have in mind is "number of accounts reporting a balance."  The published info (including negative reason codes) from FICO does not say anything about...

* Excluding charge accounts.  Your charge account reporting a positive balance has a damaging effect on this factor.

* Excluding installment accounts.  It's quite possible that any open loans you have might affect this.

* Using a ratio test solely, to the exclusion of simply considering the integer number of accounts with a balance.

Thus the thing about "percentage of revolvers" is just a meme that caught on here and has propagated in our own echo chamber.  There's many reasons it might be mistaken.

From a pracrical perspective I would experiment with implementing AZEO in its full blown form: all cards reporting $0 except one, with the remaining card being a true credit card (not a charge card) in your name (not an AU card) with a small balance reporting (e.g. $15).  That should give you a baseline for how high your score can currently go (though if you have inquiries or an Age of Youngest Account that will cross over 1 year old you will get help there too).

PS.  And yes, down the road it makes sense to add a few more true credit cards.  You should do that thoughtfully and selectively, and they should be no annual fee cards that you like and can envision keeping open for decades.

[Anonymous]

Thanks. That's very helpful. I did think the charge card would be excluded for some reason, but I guess that is only w.r.t. utilization. I will try to apply AZEO properly as you suggest.

[SouthJamaica]

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@Anonymous wrote:

My TU FICO score dropped 13 points as of mid-Feb and I would like to understand the reason.

Stats/card as follows:

- BoA Cash Rewards, open May 2018, $13700 CL, reported balance increased from $133 to $180 but PIF during the month (<2%)

- Discover IT, open May 2018, $1500 CL > $2250 during the month. Reported balance increased from $0 to $71 (<5%)

- Amex Gold, open August 2018, reported balance increased from $45 to $51 but PIF during the month

Only 2 hard pulls across CRs and no new inquiries during the period, 100% payment history, no derogatory marks. I never keep a revolving balance.

TU FICO: 726 to 713

EX FICO: 724 to 722

I am assuming the reason could be that I went from 50% (1 revolver) to 100% (2 revolvers) of credit cards reporting a balance?  However, I was under the impression that there'd be no difference betwween those to cases and that the threshold is "less than 50% reporting"?  In other words, the AZEO does not work for me as long as I only have 2 revolvers.

Any other good suggstions from the experts? Re-bucketing/categorization?

Thanks!

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I'm skeptical that those changes caused the score drop.

[SouthJamaica]

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@Anonymous wrote:
Thanks. That's very helpful. I did think the charge card would be excluded for some reason, but I guess that is only w.r.t. utilization. I will try to apply AZEO properly as you suggest.

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In FICO 8 it's excluded for utilization percentages, but it does count as an account with a balance.

[Anonymous]

Thanks. So any further ideas on what else could have happened? There would have been a soft pull for a CLI but that shouldn't matter. There were no other changes than those described above.

[SouthJamaica]

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@Anonymous wrote:
Thanks. So any further ideas on what else could have happened? There would have been a soft pull for a CLI but that shouldn't matter. There were no other changes than those described above.

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Not from what you've told us. So if there were no other changes, then I guess your original hunch -- that going from 1/2 to 2/2 cards reporting a balance -- was what caused the 13 point drop, and that my 'skepticism' is unfounded.

If you revert to 1/2, and mysteriously gain 13 points in TU FICO 8, I guess it will be confirmed.