@Anonymous wrote:
I am so confused. I had my credit cards charged at their limits, so I have been making huge payments to get them at $0 and two under 10%. When some of them paid off to 0, I actually lost points. I have verified on MyFico that it was a direct result of the card being paid down to 0. Any ideas why this would be happening? Cards still open taken my usage percentages from over 100% in some cases to 0% or less than 10%...Thoughts appreciated!
Can you expand on this in some more detail? I do not know of any myFICO product that would provide this kind of verification (that it was a direct result of them being paid to 0).
I am guessing that you are a subscriber to the myFICO 3B Monitoring product, which gave you an "alert" that you are trying to describe for us. The alert would seem to most newcomers to be something that tells you the direct cause of a score change. This is not true, however.
The alert is describing a way your report has changed. (In this case, one of your credit card balances went down.) When an "alertable" event occurs, the MF 3B monitoring product pulls your score again.
The message is explaining what the alertable event was. But there are a lot of events that are not alertable. What must have happened (with 100% certainty) is that something else changed on your report, either on the same day or in the previous several weeks. That other thing is what is causing your score to go down. It's just that this not-so-good thing apparently wasn't alertable, so your score wasn't pulled at the time.
Again, it's really important to understand what these alerts are and what they are not. Most of us assume that when our score changes then MF sends us an alert telling us why. This is not what the alerts are. What the alerts do is tell you -- in a very limited set of circumstances, not all the time -- when the report has changed. The text of the alert message is telling you what alertable event happened.
You should congratulate yourself that you are coming to understand scoring well enough to realize that a credit card balance going down should not by itself cause your score to go down. (The only exception would be if your report showed that you had paid ALL of your cards to $0. That would cause a big score drop.)
Some people find an "alert" based system confusing and unhelpful, since it cannot be relied on (even most of the time) to explain why your score has changed. Such people switch to a system like CCT, which enables you to control when your score is pulled or (like me) they just use free tools to get their monthly FICO score and credit reports.
Some things are definite gray areas in credit scoring, where nobody knows for sure how FICO is working. But CC balances are not one of them. All credit profiles are optimized when having most of the credit cards reporting at $0 and a small positive balance on one. There's no possible profile that could hurt by paying down a credit card (as long as you still have a credit card reporting with a positive balance).
That said, there are a few very weird corner cases which I should describe. In order for you to be confident that a card is really being treated as a positive balance, all of the following needs to be true:
(1) The card should be a true credit card, not a charge card.
(2) The card should be in your name, not an AU card.
(3) The amount should be at least $5, not a tiny balance like $1-2.
To see why this matters, suppose you had four cards and you paid two down to $0. The two remaining cards each showed a positive balance. One of them was an AU card and the other was an Amex charge card. From FICO's perspective it would look like all your cards were at $0 and you would get penalized. But if I understand you right, you had at least one card for which all three of the things listed above were true. If so the weird corner case doesn't apply and it must be something else on your report.
For example, a late could have appeared, a very old tradeline could have dropped off your report, etc. There are many possibilities.
My advice would be to pull your reports again to see what might be going on. If you don't have tools that enable you to pull your reports for free as often as once a week, we can suggest some to you.
Final note: you mention that you "lost points." How many? If it was only a few points then the possibilities are legion as to what might have caused it.
