Using Inactive Account caused 10 point Drop

[cem13]

I have 10 cards from various institutions.  I use NFCU as my primary and my PenFed or NASA as my back up.  All others are in my sock drawer.

Over the holidays, I brought all of my cards out of the darkness and into the light.  I used all of them for gas, coffee, milk, and (dont tell my wife) a beer.  I PIF the same day that I used them so they still reported $0.00.

My Sportsman's Visa has not been used in over 6 months but when it reported activity but a $0 balance; all 3 scores dropped EXACLT 10 points.  Today, I received another message from a second card (BBVA) indicating an inactive card has become active without any point loss.

So the trigger must be 6 months but there is no penalty for a second card becoming active in my case.  This is good to know because I will do a much better job with my rotation in the future.

[Thomas_Thumb]

Thanks for the information.Looks like 6 months may be a trigger for an inactive label.

Cards that become inactive may suffer AA such as a reduced credit line and if left inactive for a few yesrs, closure. Years ago I did not use one of my credit cards for over a year and my CL was dropped from $20k to $13k. Now I use all my cards at least every 3 to 5 months to avoid any potential AA action. Unlikely that any AA would happen if cards are used within a 12 month frequency but, I prefer not to take the risk.

It's good you used your cards and avoided a potential surprise CL slash. I would anticipate your scores should rebound within 30 days.

[elim]

Mine alert after 3 months. I rarely lose points.

[cem13]

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@elim wrote:

Mine alert after 3 months. I rarely lose points.

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I think 6 months is the magic number.  I had a card (BBVA) that was not used for 4 months.  It triggered an alert but I did not lose points.

[cem13]

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@Thomas_Thumb wrote:

It's good you used your cards and avoided a potential surprise CL slash. I would anticipate your scores should rebound within 30 days.

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I expect to get all those points back after one complete cycle.  I have several other cards reporting monthly at $0.  So my overall util is still under 5% and no more than 25% for one card.  I will post back when I get my points back.

[Anonymous]

Hi TT.  The puzzling thing is that our OP is not posting about various kinds of AA that might be taken by a credit card company due to inactivity.  (Lowering one's CL, canceling the card, etc.)

He's claiming that the FICO model itself took action against him.  And what is really strange is (if true) is that the CRAs did not report any change in any of his CC balances.  In other words, he believes that FICO punished him even though the CC that became "active" continued to report a $0 balance continuously.

If so, this is really surprising to me.  I have never seen yet a documented case of this happening.  A reported CC balance changing from $0 to a positive number -- this can certainly change your score.  So could a positive balance going to $0.  But a reported CC balance being $0 and staying $0 and the CL also not changing and the CC remaining open -- and yet that particular CC account causing the score to go down -- this I have never seen an authenticated case of.

What people certainly have reported is situations where the credit monitoring service (typically myFICO) gives an "alert" stating that a card that had not been used for a while had been recently used.  (And a CMS is very different from the FICO model.)  But in virtually every case the alert was triggered by the reported balance changing from $0 to a positive number, which can indeed cause your score to go down.  Or some other (non-alertable) change in the person's credit profile had happened in the few weeks before -- this previous event causing the score drop but the person not finding out about it until he gets the alert about a balance change.

It just seems really strange for a CC tradeline that is remaining open and is constantly showing $0 with no change in CL could cause a change in one's score.

[cem13]

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@Anonymous wrote:

Hi TT.  The puzzling thing is that our OP is not posting about various kinds of AA that might be taken by a credit card company due to inactivity.  (Lowering one's CL, canceling the card, etc.)

He's claiming that the FICO model itself took action against him.  And what is really strange is (if true) is that the CRAs did not report any change in any of his CC balances.  In other words, he believes that FICO punished him even though the CC that became "active" continued to report a $0 balance continuously.

If so, this is really surprising to me.  I have never seen yet a documented case of this happening.  A reported CC balance changing from $0 to a positive number -- this can certainly change your score.  So could a positive balance going to $0.  But a reported CC balance being $0 and staying $0 and the CL also not changing and the CC remaining open -- and yet that particular CC account causing the score to go down -- this I have never seen an authenticated case of.

What people certainly have reported is situations where the credit monitoring service (typically myFICO) gives an "alert" stating that a card that had not been used for a while had been recently used.  (And a CMS is very different from the FICO model.)  But in virtually every case the alert was triggered by the reported balance changing from $0 to a positive number, which can indeed cause your score to go down.  Or some other (non-alertable) change in the person's credit profile had happened in the few weeks before -- this previous event causing the score drop but the person not finding out about it until he gets the alert about a balance change.

It just seems really strange for a CC tradeline that is remaining open and is constantly showing $0 with no change in CL could cause a change in one's score.

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This is exactly what happened.  I will give more details.  The card in question is Sportsman's Visa.  I opened this card via SCT back in May15.  I used it upon receipt just to cycle it, PIF, then sock drawered it.  So it sat idle from June to 28DEC when I cycled it again.  I charged 2 coffees on it for $6.  Upon my return home, I went on-line and PIF the $6 bill.

This card closes on the 19th and reports on the 23rd of every month.  So when it reported to TU first yesterday, the alert was "inactive account becoming active" and a 10 point drop.  I pulled my TU report to verify nothing else changed.  A few hours later,  I get the same alert from EQ with the same 10 point drop.  I pulled my EQ and nothing changed. 

Today,  EQ sent me an alert for my BBVA card that was 4 months inactive but NO point drop.  I have yet to receive an alert on EX for either card.  If I do get an alert from EX, I will pull my report to verify nothing else changed.

So the conclusion I draw is this:  An inactive account greater than 6 months, that is used ($6 in my case) will cause a drop in score.  An inactive account 3~6 months that becomes active will NOT cause a point drop.  I will test this theory again.

My scores are ~700 with no baddies in 5 years.  Mortgage, car & 3 SL reporting along with one CC reporting balance.   BK7 filing JAN2011 and DC JUN2011.

[Thomas_Thumb]

Other posters have also reported score drops when inactive accounts become active. I don't recall timeframe of inactivity but, I believe they were in the 6 month to 18 month range. Yes, their scores "bounced back" the following cycle as I recall.

So, your experience is normal - but YMMV depending on scorecard assignment.

Let us know how things work out - and continue to use cards periodically to avoid potential AA.

[Anonymous]

Fascinating.  When you received an "alert" for the Sportsman's Visa yesterday, this alert was from the myFICO 3B credit monitoring product, right?

One definite thing this seems to show -- which I regard as significant -- is that the CMS's "once inactive now active" alert can be triggered even when the balance is staying a constant $0.  Which is interesting.

On the other hand all we can say with 100% certainty is that in the last few weeks something changed in your profile to cause a score drop, and myFICO reported the drop when an alertable event happened.  The alertable event was without question the S-Visa reporting, but the thing that caused the drop might have been a non-alertable change in the profile happening weeks ago or more. 

This sort of thing happens a huge amount around here.  People write in baffled as to why Event X could have caused a score drop.  The most recent person I responded to about this (last week I think) was a guy who was scandalized that FICO could have lowered his score because he received a credit limit increase.  What is certain is that a CLI could not have in itself caused his score to drop, but it was indeed the thing that triggered the alert -- the drop must have happened due to a change in the profile that happened earlier.

I am not saying with certainty that this must be what happened in your case, but it happens so often that it's worth considering.

Another reason I think it is worth considering is that FICO's models do in fact interpret a profile with a $0 balance across all cards as identical to a person who is not using his cards at all.  In other words, for the scoring model, the only way it conceptualizes "inactivity" is when balances are at $0.  That's actually a primitive way for FICO to work -- it should be designed to look at the date of last use.  But it doesn't.  If the scoring model had factors that assessed how recently you have used a card, it wouldn't need to use the All Zero = Not Using Your Cards rule, as we know it does.

[Anonymous]

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@Thomas_Thumb wrote:

Other posters have also reported score drops when inactive accounts become active. I don't recall timeframe of inactivity but, I believe they were in the 6 month to 18 month range. Yes, their scores "bounced back" the following cycle as I recall.

So, your experience is normal - but YMMV depending on scorecard assignment.

Let us know how things work out - and continue to use cards periodically to avoid potential AA.

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Have you seen anyone who has posted that this has happened and their balances remained $0 the entire time?  That's what is interesting about our OP's case. 

What is most common is that there is is in inactive-to-active alert and that is coinciding with a balance going from zero to positive.  That is consistent with what we know about the scoring model: an extra account with a positive balaance certainly can cause a score drop.

No one doubts that people report score drops after getting an alert that an account has become active.  But people also report lots of other stuff: score drops after getting a credit line increase, for example, which is impossible.  (If by "after" one means "caused by.")  The possibility that the score drop could have been caused by an earlier non-alertable event is crucial to bear in mind.