Very Puzzling Score Drop

[Anonymous]

Let me state first that it's been AT LEAST 16 months since I've used credit of ANY kind - no new loans or credit cards; no credit card usage; no inquiries; no late payments.

In March '11 my EQ FICO was 725 (via Score Power) with the following factors:

- payment history: GREAT

- amount of debt: NOT GOOD

- length of credit history: GREAT

- amount of new credit: VERT GOOD

By August '11 my FICO was up to 740 (via ScoreWatch Alert)  with:

- a couple of accounts paid off

- debt cut by 25%

By November '11 my FICO was down to 727 (via ScoreWatch Alert):

- due to an erroneous report from a credit card company that my balance increased by >>$40<<.

Yes, you read that correctly. As I stated, my credit cards haven't been used for more than a year, and the credit card company must've mis-reported an earlier balance and then corrected it. But still - how could $40 shake up the score by that much?!!

By December '11 (today) my EQ FICO was down to 719 (via ScorePower) with the following factors:

- payment history: GREAT (same)

- amount of debt: GOOD (improved)

- length of credit history: GREAT (same)

- amount of new credit: GREAT (improved)

- nearly A THIRD of the debt level from March '11 paid down

- ratio of revolving balances down to 35% from 43%

So exactly what is going on here?! 

Just when I decide it's time to apply for a mortgage loan preapproval (I haven't done so yet)  my score starts inexplicably sliding backwards when it should be continuing to improve.

Any thoughts about what is going on here would be appreciated?

[Anonymous]

On page two of your report "Understanding Your FICO Score" what does it list as "Hurting you Score"?

You said one of your creditors listed a balance by mistake, by any chance did they list it as a 30,60,120 day late? Look on page five "Accounts" and make sure all of your accounts are listed as "Pays Account as Agreed".

You also said you've used no credit what so ever in the last 16 months, so I assume your util is at 0%.

Fico likes to see usage and a payment history, and since you have not used your credit, Maybe Fico has reached a point that it wants to penalize you (I'm just reaching here).

So you have lost 13 points since August, I'd check the things I've mentioned above and see what Fico says is hurting your score on page two, and go thru your accounts make sure all are reporting pays as agrees.

Do you have any baddies on your reports?

I suspect, the drop could have been caused by the lack of credit usage (again just speculation).

And one last thing I can think of is your util, if you are at 0% util, Fico does not like that (from a scoring standpoint) try using one of your CC's, make a small purchase , let it report the small balance, get your util to al least 1-4% and I believe your score will go back up a little, not saying you will gain back the 13 points, but then again you might.

I'd really go through the report thoroughly, and see if any changes since your August report.

Hopefully a MyFico Expert will chime in with better advice/opinions.

Keep us posted.

EDITED 4 times to fix grammar (it's early and I'm barely through my first cup of coffee)

[Anonymous]

Thanks for your reply.

All accounts are listed as:

-  Pays account as agreed (There are no negative indicators)

As for the creditor error, there is NO indication of that on the report. The way I became aware of that is via a ScoreWatch ALERT, which told me that this creditor had reported a $40 increase in the EXISTING balance - which is impossible because the accounts are only being PAID DOWN. No new charges have been made in 16 months.

Also, my credit utilization is far  from 0% - it's currently 35%. But as detailed in the previous post - that is DOWN from 43% (March '11) when my score was HIGHER at 725, and then ROSE up to 740 (August '11). My credit score should be HIGHER than 740 in December - NOT LOWER, since all that I've done the past 16 months is lower the utilization, pay everything on time (all of the time), make NO new charges, open NO new lines of credit and close NO accounts. There are NO adverse actions I've EVER had to overcome. No collections, bankruptcies, 30/60/90s.

This is very puzzling and very frustrating - and could hardly come at a worse time. This is a 21 POINT DROP since August '11, when a 21-point gain should be the more likely outcome.

[GregB]

I would not agree that your score should have continued to improve from 740 as you paid debt down since it was probably already unusually high. Unless there is something very unusual on your reports, your EQ FICO is about where it should be - NOW.

It seems more likely that you were being scored in a Scorecard that was comparing you to a different peer group than your current group.

For a point of reference, all of my "FICO Score Ingredients" are "Great" except "Amount of Debt", which is a utilization of 40%. MY EQ FICO is 708. No negatives, not even a single Inq.

I wouldn't be upset about where you are now, just continue to pay down debt and your score will rise. I would use each one of those cards every few months to avoid a variety of problems.

In case it wasn't clear above, 35% Revolving Utilization is way too high.

[Anonymous]

Thanks for your reply.

But I'm still unclear as to why my score would DROP 21 points when the report elements have done nothing but IMPROVE over time.

As well, whatever the utilization level currently,  and how it is characterized, it has only IMPROVED, so it makes no sense to take a score ding for that.

Also, why should I actually use the credit cards if the $40 balance increase - erroneously reported - dinged my score from 740 down to 727, on the way down to 719?.

[Booner72]

I think that you are in a new scoring bucket which is why they went down.  Nothing you can do about it, time heals.  But it's good bc now you can reach new scores you couldn't in the old bucket (at least that's how I understand it to work).  "Score card = bucket."

Just keep doing what you are doing.  And don't let this freak you out, your scores are high enough for a mortgage w/ great rates.

[Anonymous]

Thanks all!

I will listen to the combined wisdom of the board, and also get up to speed on this "Score Card" aspect.

[Anonymous]

I have to agree with the other repliers, you might very well have been re-bucketed. Which is a good thing, because (like another replier has already said) you can now reach scores you could not before, this should just be a temporary setback.

Sorry for my math in my first reply, you lost 21 points as you have stated.

I knew I should have finished my first cup of coffee before logging into Fico

Keep us updated.

[AndySoCal]

Do you have any open accounts with a zero balance that have had no activity in the last six months or more ?

[Anonymous]

Yes. One account.