I'm extremely confused. Any insight would be appreciated.

[Anonymous]

 I feel like I should introduce myself since I feel like a recovering addict.... so....

Hi, I'm Mike, and I'm a recovering credit card junkie...

Ok, so now that that's out of the way, let me give you a little bit of background information so you'll better understand my confusion.  I'm 35 years old, married, and own my own home (well, the bank lets me live there at least).  Anyway, for the past 15 years, I've managed to rack up some $40,000 in credit card debt.  Of course, when you're that much in debt, it's just a good feeling to be able to make minimum payments without defaulting on anything.  That's all I've been doing for the past several years.  Drowning in debt.  That is until this year.  I've managed to be given a job opportunity that will allow me to not only pay off all my debt, but also allow me to save several thousand dollars in the process.  So, starting this past February, my debt busting mission began.  At that time, I was over $114k in debt, which consisted of my $40k credit card plus first and second mortgage (yes, it went to paying down credit card debt...), and a car loan.  My Equifax FICO score on February 22nd (when I registered) was 661.  Not bad I guess, considering the amount of debt I was in.  Part of that was due to one collection (a freakin $35 account no less) that was paid upon the first phone call.  Yeah, it was stupid, but I let a stupid doctor's bill sneak up on me.  Anyway, that was almost 2 years ago.  So, back to the background, in February, my score was 661.  My revolving credit debt to credit ratio was 80%, and my total debt to credit ratio was 79%.  So, I start paying stuff down, and by mid March, I had paid down just over $14k in credit card debt.  My new score at that time increased from 661 to 692.  Not a bad jump for a $14k reduction in revolving debt in one month I guess.  So, shortly after I got that score, my credit union reported that I had paid off my $2300 credit card with them, and my Score Watch alert let me know that my score had increased 9 more points to 701.  Ok, so I got a 9 point increase for a $2300 reduction in debt.  Not bad I guess.  About what I was expecting.  Well, since my main credit card reported last (resulting in the 692 score), I have since paid off the remaining balance of $15,500, and also paid $2400 down on my second mortgage loan.  So, needless to say, I'm just itching to see what my new score will be after Capital One reports that my credit card dropped from $15,500 to just over $120 (after finance charges applied for that month), and my credit union reports that my second mortgage dropped $2400.  That's roughly a $17,900 drop in debt, so you can imagine I'm expecting at least as much of a jump as I got from 661 to 701 after paying down $16k prior to that.  Imagine my confusion when I get my alert that my score has changed, and go check it to find it's only increased, you ready for this??  7 points, to 708.  What?!?!?  I drop my revolving credit card debt almost $15,500, and a second mortgage $2400 (yes, they've both been reported), and the score increases less than it did when it changed after just a $2300 credit card payoff?  I was fully expecting to see at least a 30-40 point jump after paying off that credit card.  After all, I got a 40 point jump with a $16k reduction in debt earlier.  Why in the world did I only get an 8 point increase with almost an $18k debt reduction this month?  Surely that can't be right.  My revolving credit has dropped from almost $24k since my 701 score, to $8,500 in one month (revolving debt to credit ratio from 49% to 16%).  Since February, my revolving debt to credit ratio has dropped from 80% to 16%, and my total debt to credit ratio has dropped from 79% down to 54%.  Can anybody give me any insight as to why I got such a small increase from my last score?

To recap, since I realize that was quite long winded.

In Feb, total revolving debt in excess of $40k with debt to credit ratio 80%.  FICO=661

In March, after paying down ~$16k in revolving debt, FICO=692 (a 31 point increase)

In late March, a $2300 credit card is reported as paid off.  New FICO=701 (a 9 point increase)

Yesterday, credit bureau notified of a $15.5k reduction in revolving debt (down to 16% ratio) and $2400 reduction in 2nd mortgage.  New FICO=708 (a measley 7 points).  WTH?!?

And to clarify, absolutely nothing has changed on my credit report other than huge debt reduction.  Absolutely no late payments, credit inquiries, new accounts, etc.  Only a ~$32k (79%) drop in revolving debt.  I know I should be happy that my credit score has gone from 661 to 708 in only 2 months, but when I got a 9 point increase after a $2300 reduction, it's disappointing to only see a 7 point reduction after an additional $18k is paid down.  And as for the remaining $8600, I plan on having it paid off in the next two months as well, so that will have me 100% revolving debt free. 

[Anonymous]

The only thing I can think of is that the major point increases happen when you get your utilization on revolving debt below 10%. At least, that's what the case was for us - and we had much less debt, but our percentages were about the same. The proportion of debt matters more than the amount.

[smallfry]

Any chance you can goodwill that new paid collection off your reports? EQ punishes severely for any negatives. What is your AAofA and your oldest account? By any chance have you pulled your TU score from this site?

[Jazzzy]

Hey...great work! I want your new job.

I'm not sure you'll get a lot of wisdom here about the mysteries of FICO scoring. I know it's frustrating, but there is no one recipe for how many points you get or lose from any positive or negative action. It's more a directional thing. You're doing the right things, and your scores will go up. FICO has so many moving parts. The age of your accounts, the age of your newest accounts, etc. all matter a great deal. Also, only a percentage of your FICO score is based on utilization. The other categories may now be having more impact than the utilization category.

You may be able to get that medical collection off of your reports. It's not something we can do here on myFICO, but Google the HIPPA process and credit reporting. There are specific steps to follow to get it done, but you should be able to get that gone.

Hang in there and keep going in the right direction.

[MarineVietVet]

Hello and welcome.

My advice? Don't worry about a few points up or down in your score. You're moving in the right direction and that's all that matters. As Lynette said FICO scoring is a mysterious creature and if you spend too much time trying to decipher "why this and why that" you'll take your focus off of what should be your main concern; getting out of debt.

Continue on the path you are on now. You're doing just fine.

From a BK years ago to:
8/09 TU-765 EQ- 783
9/09 EX pulled by lender 802
3/10 EQ- 800

You can do the same thing with hard work

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[Anonymous]

Yeah, I know the debt to credit ratio is a big factor. What I don't understand is how the initial drop of $16k (which brought it from 80% to just over 50% debt to credit ratio) netted me a 31 point increase, and the second drop of $2300 (which brought the debt to credit ratio down from just over 50% to 49%) netted me a 9 point increase, yet my last drop of $18k, which decreased my ratio from 49% to 16% only gave me a 7 point increase. Even less than my 1% drop from 50 to 49%. I'm almost tempted to buy a myFICO score, just to see if it's the same, but would hate to waste $15 only to find out it is.

[AndySoCal]

Look the the score reasons on your first credit report and look at the score reasons on your most recent credit report Equifax of the ones hurting your score.  I would presume one of the reasons on the first report is related to your credit card debt. Notice which reason it is first ,second, third or fourth.  Now look at the reasons on yourmost recent report find the reason related to the credit card debt. Which reason is it on the list?  Here is the purpose for that exercise. The reasons on your credit report are in order of impact on your score.  I would presume on your most recent report your credit card debt or overall indebtedness is lower in impact. Hence the reason for the lower score increase.

[GregB]

Depending on the number of accounts with balances, that remaining $120 on the CapOne account could be hurting you quite a bit. You need to have a substantial amount of revolving reporting $0 for your best score. I have quite a few accounts and the line seems to be at about 50% of accounts reporting balances. If I go above that it has a big effect on the score. I just cleared a balance (also CapOne). I calculated the interest and payed a bit over the amount due plus my calculated interest. CapOne lets you make a single payment online of the balance plus 10%. Now my statement closed with a credit of $6 instead of showing the $58 balance from the interest. I did this to avoid one more account showing a balance.

Next month when you pay off the CapOne account to zero, you should notice more effect.

Your score would probably been the same if you owed CapOne $1, the $120, or even a much larger amount as long as the amount didn't push your utilization with CapOne over 9% OR your total utilization into the next range.

Also, your score is only going so far as long as that collection is on your report. You probably can't get past 740 or so.

[Anonymous]

That medical collection is probably what is hurting you. If you are in the 720 range, just one negative like a collection can weigh you down 40-60 points. If you were already down in the 620 range, one collection would probably only hurt your score about 20 points. Only time will raise your scores at this point. When something negative happens your score shoot down really fast, but when you do something postive, it takes time to build them back up again. It's a sad but true story about the scoring system being completely screwy and hard to understand.

Edited

Cheers! : )

Hi sward522, your post was edited to remove the dispute suggestion which violates our Credit Repair Discussion Guidelines, Terms of Service, and User Guidelines that prohibit the promotion of certain types of credit repair. Specifically, advocating the removal of accurate info via a dispute isn't allowed on these forums. -llecs, myFICO moderator.