I'm totally lost

[jbylake1]

I have a Premium US Bank Card, Amex Everyday Cash, US Bank Rewards card, all with limits between 10, 500 and 11,0000. A Discover it with a limit of 5.5K and a Citi-Diamond Preferred card with a 3500 limit.  I try to mix them up a bit, but I rarely if ever charge anything over 300 - 400, and more than likely it's usually one card under $200 a month.  I pay most of them off each month, or 2 months at most.

Here's what I don't understand.  When my Fico score checks the credit agencies, if I have a balance, of say $120, my FICO score goes up 9 or 10 points.  When I pay it off, my FICO score drops by 9 or 10 points.  I thought when my credit utilization was lower, my score should go up, but it's just the opposite.

Also, I have no bill except an Auto Loan.  I did have a 3 year loan on a motorcycle, and when I paid the loan off, just recently, instead of my score going up, for utilizing less credit, I was hit in the face with all three FICO scores dropping fairly drastically. (I checked the email notification from myFICO, and it showed the red down arrow and amount of score drop, for being a responsible debtor.  Like the title says, I am truly at a loss of understanding any of this.

It's like keeping my bills paid off and on time, and also keeping my utilization ration low to zero, I'm being punished.  But if I run out and charge something, just for arguments sake, I don't need, to show a $400 charge and higher utilization of my credit ratio, I get rewarded for getting into more debt.

This sounds exactly opposite of what I would think.  I think I'm very responsible with the use of credit cards, usually paying them off completely each month, and making all of a loans payments on time, and having the balance drop to zero, well I'm getting punished with a LOWER FICO score.

Anyone that can help me understand this, well I thank you ahead for your time and trouble.

J.

[kdm31091]

This is mostly because FICO scores do not like 0 balance on all cards. It appears you aren't using credit and causes a score dip. You need to let one small balance report every month.

Allowing a small 1-9% balance to report on one card is best; if you don't want to micromanage, staying under 20-30 max% utilization at all times will work too (probably a few less points).

[jbylake1]

O.K., still a bit confused, but thank you for the explanation.

J.

[Pway]

I totally understand your frustration.  It's like damned if you do damned if you don't.  This is the credit scoring game we must play. 

[Anonymous]

I did have a 3 year loan on a motorcycle, and when I paid the loan off, just recently, instead of my score going up, for utilizing less credit, I was hit in the face with all three FICO scores dropping fairly drastically.

This is one of the stupid things about Fico scoring. When we pay off an installment loan, it causes scores to drop. You aren't alone.

[NRB525]

+1 to don't let all the cards go to zero.

If you want an easy way to work this, just use your BCE card throughout the month, let the balance report, PIF by the due date, but don't stop using it the following month, use it at least one time each and every month. You will always have activity during each month, and always report a small balance on the card on the statement, never going to zero.

The other cards you can do the platooning thing, letting them go to zero regularly while you use the next card in that lineup.

[Anonymous]

if you are here you are not totally lost 

[Aarvard]

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@NRB525 wrote:

+1 to don't let all the cards go to zero.

If you want an easy way to work this, just use your BCE card throughout the month, let the balance report, PIF by the due date, but don't stop using it the following month, use it at least one time each and every month. You will always have activity during each month, and always report a small balance on the card on the statement, never going to zero.

The other cards you can do the platooning thing, letting them go to zero regularly while you use the next card in that lineup.

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When I let all of my cards reported 0 balance, my EQ 04 increased by 5 points but my EX 08 dropped 16 points. All the versions of FICO drive me crazy.

[Anonymous]

OP,

Please forgive me for my bit of amusement at your post.  I have read several posts this morning that begin with similar statements," I pay my credit cards off each month..."  And indeed that is a good thing.  However, two things, when and how much is the question.  Most people who are not "credit score junkies" like those here on Myfico do not know that what counts (and gets reported) is what shows at the moment the statement closes.

 I have two new Amex cards, applied in late January...I have used the cards and Amex says,"no payment due at this time". The Gold card closed a few days ago with a balance of $61.  Sure enough, it reports to the Bureau today as a new account and with a $61 balance!  My score drops by 6 points.  Noticing that the statement closed and my Everyday card showed "no payment due at this time" but said statment from Jan 26-Feb 20....I made a payment of $1,100 on a balance of $1,321(no interest until 02/16).  So when my statement closes today, there will be a $221 balance showing on a credit limit of $3,500.  Imagine what my score would look like if I had allowed the full $1321 to report?  So some of your scoring will be a result of ignorance of how things work with Credit Scoring.  However, now that you are a member of MyFico, I will say, if you stick around and read through the various threads on this forum, you'll arm yourself with enough knowledge to rigged the scoring game in your favor.  Because after all, unless you are applying for credit(a mortgage, auto loan or credit card) your score means nothing at the moment. 

[NRB525]

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@Anonymous wrote:

OP,

Please forgive me for my bit of amusement at your post.  I have read several posts this morning that begin with similar statements," I pay my credit cards off each month..."  And indeed that is a good thing.  However, two things, when and how much is the question.  Most people who are not "credit score junkies" like those here on Myfico do not know that what counts (and gets reported) is what shows at the moment the statement closes.

 I have two new Amex cards, applied in late January...I have used the cards and Amex says,"no payment due at this time". The Gold card closed a few days ago with a balance of $61.  Sure enough, it reports to the Bureau today as a new account and with a $61 balance!  My score drops by 6 points.  Noticing that the statement closed and my Everyday card showed "no payment due at this time" but said statment from Jan 26-Feb 20....I made a payment of $1,100 on a balance of $1,321(no interest until 02/16).  So when my statement closes today, there will be a $221 balance showing on a credit limit of $3,500.  Imagine what my score would look like if I had allowed the full $1321 to report?  So some of your scoring will be a result of ignorance of how things work with Credit Scoring.  However, now that you are a member of MyFico, I will say, if you stick around and read through the various threads on this forum, you'll arm yourself with enough knowledge to rigged the scoring game in your favor.  Because after all, unless you are applying for credit(a mortgage, auto loan or credit card) your score means nothing at the moment. 

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Statement closes: US Bank reports what your balance is at the moment they send all the accounts over, right around the end of the calendar month, regardless of statement date.

FICO is a score, and your score has rocketed recently, but no interest offers are real cash savings for people with balances. If one gets a 0% APR offer then it pays real dollars in the form of reduced interest cost to go ahead and raise the utilization on the account, FICO be darned.

The PRG had an effect on your FICO most likely because it is a new account with no CL. The ED reports the amount outstanding with a CL amount, so the added CL has a mitigating effect. Reporting the ED with $1,321 would have saved you money on future interest, would have come with an additional CL of $3,500, and have an under 30% utilization. So we can't expect that to be significantly worse than adding the PRG, which seems to be the implication of the imagine. Did the ED actually trigger any notice on your reports yet?