Why did my Equifax score just drop?????/

[siren8780]

Has anyone ever seen this? I did a dispute to Equifax and my score just dropped 25 points becuase of the dispute. Makes no sense.....Will it go back up? The alert also shows that I paid off a credit card and brought the balance back to 0. I just don't get it. 

[Anonymous]

Are ALL of your credit cards reporting zero balances?  This could result in a 25 point drop.  What was the dispute involving?

[siren8780]

Yes only have one credit card. I opened another just so I can pay it off slowly. I had no idea paying off a card would lower my score. I'm so frustrated. I thought it would help.

[Anonymous]

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@siren8780 wrote:
Yes only have one credit card. I opened another just so I can pay it off slowly. I had no idea paying off a card would lower my score. I'm so frustrated. I thought it would help.

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You're not alone in thinking this.  First of all, paying of a credit card is a great thing.  You made the right move so be happy about that!

Getting back your 25 points is super easy; you'll have them back within 30 days if you follow this simple rule.  Allow a SMALL balance (say $5 to $15) to report on your credit card every month.  Since you just added another card, it may take a cycle or two for that card to appear on your credit reports.  Once it does, you can allow either one of these cards to report a small balance while the other reports $0.  This will maximize your scoring for the 2 cards that you have.  Ideally you'll want to add a 3rd card at some point and allow a small balance to report on 1 of the 3, or 33% of your cards reporting a balance.  Maximum FICO points for the utilization sector of scoring are achieved when less than 50% of your cards reports a small balance.  Since you only have 2 cards now, your only options are 0%, 50% or 100% of your cards reporting.  Add that 3rd card and you get to add that 33% option which will result in an even greater score increase.

[siren8780]

Thank you! I also think that it might be the dispute. Right after I posted this I got an upadte which said that a dispute on an account was complete. The company didn't review the dispute and just updated the information so it hit my score again! I called the company directly to explain that I am not the owner of the account and it needs to be deleted and sent them proof. Hopefully they will delete and that will also help me get those 25 points back.

[Anonymous]

Does the account contain negative information?  If not, having it removed shouldn't impact your score.

To my knowledge, a dispute in and of itself doesn't result in a score drop.  I think perhaps a disputed account may temporarily not be included into scoring, so if that account had a huge credit line (say $30k) having that not included could result in a utilization increase due to balances on lesser cards which could result in a score drop. 

Someone else with knowledge of disputed accounts can chime in on this, but I don't believe that it's possible to lose 25 points simply because an account is disputed.  I maintain that your score drop was due to your aggregate utilization being 0%.  Allowing a balance to report and thus "use of revolving credit" will get you back those points, IMO.

[siren8780]

The disputed account is a mortgage. It has A LOT of negatives. Over 30 late payments, and it is not mine (loan is in spouses name, long story). It was sold to another servicer about a year and a half ago. At first I was going to let it stay because mortgages help your score in the long run. But with that many lates (and comments about forclosure), I disputed becuase I read that it can hold back my score significantly for the next several years until the old lates age off. Since they just updated the account and didn't delete it (which they've agreed to do now after following up), i thought that maybe the udpates impacted caused those old lates to impact my score again (like a double hit). 

I agree that the drop was probably from paying off the credit card. I'm going to take your advice and keep that old card at a 0 balance. I just got approved for $1500 on the new card and spent just over the 33% utilization amount (about $550).  I'll make sure to pay it down slowly and let a small balance remain so I get the bump for regular on time payments.