Score declined 8 points in 4 months, but I had no adverse information over the period

[Anonymous]

Hello,

I am just trying to understand the reason why my credit score dropped.  I was turned down today for an auto loan which is why I am curious.

I only have 3 trade lines, and there is no negative information whatsoever on my credit report:

   a.) Wells Fargo secured credit card, opened May 2010 - always paid in full and on time

   b.) Capital One unsecured credit card, opened December 2010 - always paid in full and on time

   c.) Best Buy credit card, opened May 2011 - always paid in full and on time

In October 2011, I applied for a newegg.com credit account (hidden trade line) and was turned down.  My Equifax score was 694 on that day.  I applied again in December and was accepted, so I am unsure of what my credit score was on that day.  I have not used that account at all, but even if I did the account isn't reported to FICO, so it shouldn't matter.

Today I applied for an auto loan and was turned down.  The credit union pulled my Equifax bureau again and I scored 686.

So I am wondering how I scored 686 on my Experien bureau today when I scored 694 in October and I have made all of my monthly payments on time and in full on my 3 credit accounts since then.  I would have assumed it should have gone up, especially considering that newegg.com approved me in December.

Any information is greatly appreciated.  Thank you.

[llecs]

Welcome to the forums!

There are three major credit reporting agencies: TransUnion, Experian, and Equifax. And with each CRA, there are three different FICO scores. And the FICO formula isn't the same for all 3. Each varies and differs. Moreover, it's highly unlikely all 3 reports would exactly match with the same accounts and same inquiries. And if it did, even small differences like dates, balances, stati, comments, etc., will always differ because they don't update exactly at the same time and because some creditors will report differently across all 3 reports at times. And of course, your report from October will not match your report pulled today.

Because of the above, you can't compare a score pulled from Equifax with a score pulled from Experian. Moreover, check the source for your Equifax score. There are dozens upon dozens of companies that offer scores, but there are only a couple of places you can get your true FICO score. If pulled from any location other than myFICO, your lender, or from a couple of select pages within Equifax.com, and does not say "FICO" next to the score, then it isn't a FICO score. It's like comparing New York Giant's 17 points this past weekend with the Game 7 World Series win of 6 points for St. Louis this past year. You can't compare the 17 points with the 6 points because it's two different systems and two different scoring styles.

Finally, and assuming for a second that your Equifax score was a classic FICO score and came from a lender or through here, the score from Experian may be a FICO, but it might not be a classic FICO as used by other lenders. Many auto lenders will use an auto-enhanced FICO which would always be different from your Classic FICO if pulled the same day.

And in the realm of things, 8 points isn't much anyway. With three different accounts reporting, your scores can change three different times each month.

[Anonymous]

Hello Illecs, thank you very much for the reply.  It was very informative. 

I should note that I noticed an error in my original post and have since corrected it - my Equifax bureau was pulled both times.  I have never had my Experian bureau pulled. 

[kjm79]

To add to what llecs said, are you letting balances report?  You say you PIF every month.  What kind of usage are you reporting? People tend to think that because they pay in full every month that their scores will get better because of that.  Yes and no.  Yes because you are establishing a good paymeny history.  No because of the possible damage to utilization.  Let's just say that you have one credit card with a $1000 limit.  You charged $500 on it and that is what is on your statement when it cuts and is reported to the CRA's.  Your reported utilization would be 50%.  $500/$1000.  Which in FICO world isn't good.  So check to see what your utilization is.  And if the opposite direction, if you let ZERO balances report it looks as though you're not using credit and your score will suffer because of that. 

[Anonymous]

So you're saying that if I have a balance of, say, $5 on my card and it is due on the 8th, that I should not pay it until the 8th of the following month?

[MarineVietVet]

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@Anonymous wrote:

So you're saying that if I have a balance of, say, $5 on my card and it is due on the 8th, that I should not pay it until the 8th of the following month?

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Hi there.

Everyone's situation is different and there is no one size fits all approach to this but what seems to work well for most people is to have only one of their cards report a small (<9% of it's credit limit) balance each month and then pay in full before the due date. You can use it as much as you want during the month but what's important is the reported balance because for most cards whatever is reported on the monthly statement is what is used to calculate utilization for the month.

You might have to play around with the percentages for a few months to see what works best for you. Some people say that 1-3% utilization helps the most. For others it might be 5-9%. As I said it's not one size fits all.

On any other cards always try and have them report a zero balance each month. That doesn't mean you can't use them just make sure that the desired zero balance on these accounts is achieved several days before their statements post.

Along with individual and overall utilization, FICO also scores the number of all types of accounts reporting a balance.at any one time Making sure less than half of all your accounts report a balance helps most people.

Now this approach really isn't necessary if you're not looking to apply for any credit in the near future or unless you are trying to tweak your score for maximum effect but some folks do this as a hobby just to see how high they can get their score.

"Some people spend an entire lifetime wondering if they've made a difference. The Marines don't have that problem".

[Anonymous]

Thank you very much MarineVietVet.  Very informative and helpful.