Paid down my debt load over 25k and my EQ FICO DROPPED FROM 696 TO 678

[Anonymous]

I just spent over an hour with a MYFICO rep trying to understand why my EQUIFAX FICO score dropped from 696 in 12/08 to 678 today, 4/6/09.   The changes are I paid down a HELOC by 10K and credit cards by 15K for total over 25K reductions since December.  No derogs or CA's on a 20 year history.  They couldn't give an answer other than it was re-formulated and they will have a higher level analyst review my reports and answer me with 72 hours.

Has anyone else experienced something similar recently?  This is unbelievable.   You pay down debt over 25K and than have a EX FICO score drop by 18.   Yet, my TU FICO is now 723.  I don't know what it was in December. 

I've been trying to refinance some commercial property and needed my FICO over 700 to qualify.   This MAKES NO SENSE.

edited to change Equifax abbreviation in title from EX to EQ. (In our informal abbreviations, EX = Experian.)

Message Edited by haulingthescoreup on 04-06-2009 03:53 PM

[haulingthescoreup]

Hi, welcome to the forums!

What is the credit limit on your HELOC? Most HELOC's over $30K or $40K are not included in your util calculation, so that paydown wouldn't have helped your scores. Certainly, I would have thought that the $15K paydown on your CC's would have helped, though.

Can you please post back we the before-and-afters on the 696 report and the 678 report? If you can screenshot it, that would be great. Otherwise, please list what they show for:

(on Credit-at-a-Glance screen)
Total of accounts past due (yours both should be 0)
Credit history
Late payments (yours both should be 0)
Balances for all three types of credit
Number of accounts
Number of accounts with balances
Accounts opened in last year
Recent inquiries

(on Understanding Your FICO Score screen)
Util (Ratio of your revolving balances to your credit limits) --if shown
Average age of accounts --if shown
The positives and negatives from each report

It is possible that your history aged and put you into a new score bucket, but I would not have expected such a drop with clean reports.

[debtfree09]

Just for my own curiosity why don't HELOCs over $30-40k not count in your utilization?

[haulingthescoreup]

I don't know why they chose to handle them this way. They do the same thing with high-limit CC's.

EX has a different threshold for the exclusion, so lower-limit HELOC's (when they've been used, and they have good-sized balances) are more likely to count against your EX score than against the others. Ask MidnightVoice.

All I know is that, as someone who uses a HELOC to cover home improvement and college tuition expenses, I'm quietly grateful that it isn't factored in!

[Anonymous]

I no longer have access to the before report with FICO online but do have the printable report format as a pdf.

The different formats make it harder to make an apples to apples comparison.

BEFORE

RECENT

Message Edited by jallison on 04-29-2009 11:23 AM

[Anonymous]

Sorry.  I tried to paste images of the before and recent reports but couldn't do it.   My HELOC is

at 165K on 177K available.  Thanks for your help.

[Anonymous]

What is the credit limit on your HELOC? Most HELOC's over $30K or $40K are not included in your util calculation, so that paydown wouldn't have helped your scores. Certainly, I would have thought that the $15K paydown on your CC's would have helped, though.

697/Dec-08 177/177K

678/Apr-09  165/177K

 Can you please post back we the before-and-afters on the 696 report and the 678 report? If you can screenshot it, that would be great. Otherwise, please list what they show for:

Total of accounts past due (yours both should be 0)

697/Dec-08 0

678/Apr-09 0

 Late payments (yours both should be 0)

697/Dec-08 0

678/Apr-09 0

Balances for all three types of credit

Revolving Accounts

697/Dec-08 $282,644

678/Apr-09  $258,279

Mortgages

 697/Dec-08 $294,835

 678/Apr-09  $294,259

Installment Loans

 697/Dec-08 $    7,685

 678/Apr-09 $    7,129

Number of accounts

34

34

Number of accounts with balances

13

13

Accounts opened in last year

0

0

Recent inquiries

2

2

(on Understanding Your FICO Score screen)

Util (Ratio of your revolving balances to your credit limits) --if shown

71%

62%

Average age of accounts --if shown

9

9

The positives and negatives from each report

Unable to compare/should be the same

It is possible that your history aged and put you into a new score bucket, but I would not have expected such a drop with clean reports.

19yrs

20yrs

[JJF]

I don't mean this in a negative way.  I understand that FICO scoring is a measure of risk.  You have over three quarters of a million dollars in debt.  Let me tell you if I had that amount of debt the risk of default would be 100%, I would already be dead from a major heart attack.

Total debt is often judged against debt /income ratio.  However, FICO scoring does not include income.  I have wondered how total debt effects FICO scoring.

On one hand a person with $5,000 in debt may be less likely to default on it than a person with $500,000 in debt.

However, if the person with $5,000 in debt increases to $25,000 in debt, then they may be more likely to default because they do not know how to handle large amounts of debt.

 I have often wondered if the high limit number in some way has any effect on FICO scoring.  If the account has a high limit and the account was never late, then it shows the person has demonstrated the ability to handle debt to the high limit successfully.  

Any thoughts from the gurus and knowledgable people as to how total debt and high limits effect FICO scoring?

[Junejer]

Total debt has no bearing at all on FICO scoring. The CLs only comes into play as it concerns your utilization thereof. So, a $500 CL with a $25 is treated the same as a $25,000 CL with a $1250 balance. Both are at 5% util and treated equally by FICO scoring.

[Anonymous]

My debt load is NOT the question here. You have no clue as to my personal finances and asset base.  Obviously there must be some assets to have access to this amount of credit.

The question is why my FICO score declined with Equifax while it improved with Transunion and Experian when the the debt load was reduced by over 25K.  FICO promised an answer by 4/9 but did not follow through on their commitment.  I contacted them again today and was told I had to wait another 2-3 days for a senior analyst to review the data and contact me.