My husband was trying to build his credit and I was trying to make mine better. He got a secured credit card and I was added as an authorized user. When we paid the card off after six months when he got his score my score dropped. We charged $20.00 on it and I got an alert that my score had dropped another five points. I'm confused???? I was told by the Mortgage Co that we want to use to use the card but only charge $20.00 on it. Can anyone shed some light as to why it dropped 5 points again???????? Thank you
Welcome to the forums Janey!
I moved your post here to get a better response; smorgasbord is just general chit chat on this forum.
Is this secured card you are an AU on your only revolving account (Credit card generally)?
Where are you getting your scores from?
The $20 claim would be incorrect. FICO scores whatever is on your report. Credit cards only report once per month and typically report the balance you had on your credit report. So, you can charge as much as you want up to $500, but for maximum points, make sure the balance is down to where you want it by the statement date. For max points, get all of your CCs to report $0 except one and get the one to report a balance of under 9% of the CL (so $45).
I'm getting my score from here "myfico.com". The reason that she told us to put like $20.00 on the card is because the limit is only $200.00. The balance is $19.99 and after the credit card company reported to the credit bureau is when my score dropped. That's what I can't figure out. We pay it off and my score dropped then we charged that little bit and it dropped another five points. So confused by all of this. I do keep tabs on my credit to make sure everythings good tho. We just paid a large portion on my car so hopefully that helps my score go up. I appreciate any insight to this.
You mentioned an "alert" so I'm guessing you are using SW and that the score change was on your EQ FICO. SW alerts can be misinterpreted sometimes. Any credit alert, like for a balance increase, will result in an automatic retrieval of your EQ FICO. It's easy to assume that your score change of X was caused by the reason they gave of Y. For example, I once got an alert for +20 because I added an inquiry. Inquiries don't increase FICO scores but it was the removal of a baddie that led to a net increase of +20, and of course SW doesn't alert for dropped accounts. In other words, there may be something else causing the point change.
Let's say for a second that the cause is the cause. Then we need to throw out some guesses and assumptions as to why the score changed. Everyone's FICO score is difference. Some people can increase their CC util by 50% and see no score change. Others can increase it by that much and see losses of 50-60-70+ or more. Questions:
Is this your only CC?
Is the CC still reporting as opened?
Some people can get dinged for putting $20 on a $200 CL CC. Util can start taking a hit once it hits double digits. I personaly have lost a handful of points by hitting 10% util. Ideally you'd want a balance of $18 or less reporting. For some folks, they'll get dinged at 9%. You need to find that sweet spot. Might be2%, 3% or whatever. Takes time to figure that out though. But if you are looking for a point here and there, then it's worth it.
Also, adding another non-$0 balance can often result in a score ding. FICO likes to see more than half of your reported balances at $0, but can continue to ding you beyond just one TL, though that isn't too common for most. So, get all of your accounts to $0 except for one, and get the remainder under 9% of your CL. Since oyu have a car not, use that one as a non-$0 account and let the CC report $0. You might eek out a few extra.
The new account ding is unavoidable, but will fade over time. Usually by 6 months from the open date most of the points will have returned. Virtually all will have returned by a year. Again, depends on your overall credit.
Thank you for all of your information. Yes this is my only cc. and correct I am using score watch. I will have to order my report to see what is on it to make sure I didn't overlook something that would cause it to drop. Thanks again your insight to this matter is very much appreciated.