I'm confused

[Anonymous]

Just ran my score from Equifax.  It was 790. Yeah, that isn't bad, but I have a hard time understanding why it isn't even higher.  I have one credit card with a credit line of $21,500 and a balance of $1215.  I have another one it shows as open, even though I thought I closed it years ago, with a credit limit of $0.  Why they havn't closed it, is beyond me.  Anyway, it says on the score that I was penalized because it says "The amount owed on my revolving/charge accounts is to high".  Huh?  I owe $1200 total, that is it...nothing else.   And then it says, "The proportion of balances to credit limits (high credit) on your revolving/charge accounts is too high."  That $1215 is all I owe to anybody...period....no mortgage...no car payment...no other installment loans.  How the heck can my balance be too high?  Back when I had a mortage my credit score was in the 800s, so I get penalized for that too. 

[Anonymous]

Credit diversity, I guess?

[Anonymous]

I know that affects the overall score, but it makes me wonder why doesn't it say that instead of focusing on my balance?  It does mention my lack of mortgage affecting my score.  Oh well...I'm not too worried about it.  It is just confusing me.

[RobertEG]

They way FICO calculates credit scores is not one vanilla, logical continuum.  By getting better, your score can easily drop.

Let me share my recent experience. 

Credit report and score back in November:  Overall revolv until of 12%.  The accompaning dialog said that this was very good, and my credit score was 727.

Credit report and score for December:  Overall revolv %util reduced to 10%.  No other changes of significance in the report.  Yet it now said that my %util was too high,and my score dropped by 19 pts.

If I did not understand the "bucket" scoring system, this would have seened totally illogical.  How in the world could my %util be viewed one month as good, I then reduce it, and then next month, FICO says it is too high? 

But I know what happened.  I reached a threshold which put me under a new FICO scoring algorithm, and I an now being scored against an entirely different consumer base.  FairIsaac has 10-12 differnt scoring algorithms.  I guess the bucket they have now put me in thinks that 10% is bad, wheras the old bucket thought that 12% was neat.

I dont fret this.  I know that improving my % util is good, and I cant control the short term FICO view of how they score it. In the long run, being in an improved credit category will only help.  Short term FICO score changes are not always a literal thermometer of monthly changes in credit worthiness.  It is just they way the scoring system works.

Message Edited by RobertEG on 12-21-2008 11:33 PM

Message Edited by RobertEG on 12-21-2008 11:39 PM

[Anonymous]

Thank you for the explanation.  I can see how people who have a borderline score can get frustrated.  I've never even really cared about my score.  Just paid my bills on time and tried not to have too much outstanding, and it has seemed to work for me.  I have a couple of inquiries that should be dropping off in the next month which should put me back up in the 800s again.