My FICO score went up 20 points November and then dropped 20 in January. What gives?

[Anonymous]

For the past 9 months, I have been trying to build my FICO credit score from where I have had none prior. On November 27th, 2017 my score went from 722 (Good) to 742 (Very Good). I was very happy and thought I was on the right track. I have no late payments on my credit card, and a very low utilization. (I always keep it well under 30%) Usually when my credit gets reported to the bureaus, I usually keep my utilization between 0% - 5% at most.

Then on January 21, 2018, I noticed that my FICO score went from 742 (Very Good) down to 722 (Good). I honestly do not know why I lost 20 points. I have been continuing the same trend I have been doing prior with paying off my credit card, and have a low utilization before the credit gets reported to the agencies for the month. I have not started up any loans, nor any credit checks within that time. Basically nothing has really changed with my credit that would cause me to lose the 20 points I gained.

So what gives? I am confused, and a little frustrated. I was hoping I could stay within the Very Good category so I could eventually finance a car in Feburary and get a good interest rate. I can use advice.

[SouthJamaica]

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@Anonymous wrote:

For the past 9 months, I have been trying to build my FICO credit score from where I have had none prior. On November 27th, 2017 my score went from 722 (Good) to 742 (Very Good). I was very happy and thought I was on the right track. I have no late payments on my credit card, and a very low utilization. (I always keep it well under 30%) Usually when my credit gets reported to the bureaus, I usually keep my utilization between 0% - 5% at most.

Then on January 21, 2018, I noticed that my FICO score went from 742 (Very Good) down to 722 (Good). I honestly do not know why I lost 20 points. I have been continuing the same trend I have been doing prior with paying off my credit card, and have a low utilization before the credit gets reported to the agencies for the month. I have not started up any loans, nor any credit checks within that time. Basically nothing has really changed with my credit that would cause me to lose the 20 points I gained.

So what gives? I am confused, and a little frustrated. I was hoping I could stay within the Very Good category so I could eventually finance a car in Feburary and get a good interest rate. I can use advice.

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Do you have just one card? If so you should try letting it report at zero one month, and with a sub-9% balance the next month, and see which gives you the best score. Then stick with that.

[Anonymous]

Yes. I only have one card. I will try that strategy, and see if it makes a difference. I'm also gonna look at my credit utilization history between November and January.

[Anonymous]

Okay. This is interesting. Here's how my history looks.

On October 30, 2017 I obtained my first FICO score.

On October 30, 2017 my FICO score was at 722 with a 0% credit utilization reported.
On November 27, 2017 my FICO score jumped to 742 with a 2% credit utilization reported.
On December 25, 2017 my FICO score remained at 742 with a 1% credit utilization reported.
On January 21, 2018 my FICO core dropped to 722 with a 0% credit utilization reported.

Could it be possible that paying off my credit card before the monthly report, leaving a $0.00 balance with a 0% credit utilization could be harming my credit score growth? I thought this is what the credit agencies wanted? I am going to try and leave a little bit of a balance for the next month report, showing at least 2% of credit usage, and see if that affects my FICO score.
 

[HeavenOhio]

It looks like you already have the data.

The general advice for one card is to leave a small positive balance. A balance of zero will ding you. 20 points sounds about right. Leave a small positive balance next month, and you'll see the points come back. After that, if you happen to report zero, you'll know what's causing the ding. That should eliminate any frustration involved.

[HeavenOhio]

To follow up, your small balance should be at least $5. That'll avoid a small balance waiver. That's when a card company forgives a small balance rather than bothering to bill you, which results in the card reporting a balance of zero for the month.

Or you could decide that reporting a zero balance occasionally is OK now that you understand the cause of the ding and that you can get the points back the following month.

[Anonymous]

Hmm. I wonder if my credit score would go even higher if I had a higher credit utilizaton of 10%. I know it's a balancing act. I keep hearing I should never go over 30% (and I am also hearing other sources say don't go above 20 - 25%)

[HeavenOhio]

First, note that "under 10%" means 8.9% or below, "under 30%" means 28.9% or below, etc. That's because all decimals round up. 9.00000001%, 29.00000001, etc. will cause you to cross a threshold and will cause a possible scoring hit.

The best case scenario for scoring is to keep your balance under 8.9%. The reason you keep hearing "under 30%" is that 28.9% or below is considered responsible borrowing, and it will keep you from getting into trouble with lenders. For scoring purposes, that's the second best scenario.

[Gmood1]

Your score will go higher with the addition of two more CC's or revolving lines of credit. I suspect you won't see as much fluctuating in your scores with a little thicker file. The balancing act goes away the thicker and more diverse your credit file is.

[atarvuzdar]

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@Anonymous wrote:

Okay. This is interesting. Here's how my history looks.

On October 30, 2017 I obtained my first FICO score.

On October 30, 2017 my FICO score was at 722 with a 0% credit utilization reported.
On November 27, 2017 my FICO score jumped to 742 with a 2% credit utilization reported.
On December 25, 2017 my FICO score remained at 742 with a 1% credit utilization reported.
On January 21, 2018 my FICO core dropped to 722 with a 0% credit utilization reported.

Could it be possible that paying off my credit card before the monthly report, leaving a $0.00 balance with a 0% credit utilization could be harming my credit score growth? I thought this is what the credit agencies wanted? I am going to try and leave a little bit of a balance for the next month report, showing at least 2% of credit usage, and see if that affects my FICO score.
 

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Right on. Let a small balance (under 8.9%, as others indicated) report on your card. Looks like that'll get you the 20 pts back. Wait until this reports before going for auto loan next month. Way to go for figuring out the root cause!