@Lexi0000 wrote:Hello,
I’m trying to figure out why my score went down today by 17pts when I was actually expecting it to go up. The only difference between this month and last month’s report is that my credit card balances went down to 0 and i got a credit $1000 credit line increase for one of my 2 credit cards. I actually thought those 2 things would help increase my score but it is the contrary! What gives?
Oh and a few inquiries were also removed from my report.
I wanted to ask this here before I reach out to Experian to figure this out.
Thanks in advance for your responses.
You'd be wasting your breath asking experian, so don't bother.
It sounds like you've just been introduced to the "All Zero Penalty", which occurs when all of your revolving accounts report a zero balance. But not to worry, this is very short term, and easy to avoid. Just make sure one account reports a small balance before you pay it off.
@Lexi0000 Its not corrupted. I agree it doesnt make sense on many factors that make up FICO. It is what it is. FICO doesnt look at how much your charged on a account. Its whats reported. Nothing reports. Your not using your revolving credit in FICO's eyes. To FICO it lets other creditors kinda see you not using revolving credit. Why give you more if its not going to be used to make $ for other compnaies. Worse is paying off your only loan and getting whacked with 20+ pts for no loans reporting. Same deal on the other end with loans. Leave $20 on 1 account and then PIF before the due date. It isnt hard to do. Just play the system as a numbers game.
@Lexi0000 wrote:Thank you. I wasn't aware of this. This just confirm to me (again) that the whole system is corrupted and designed to keep you in debt your whole life. It's disgusting, really. I admire people who just pay cash for everything and do not have to depend on this messed up system! We should all aim to get out of it.
I agree that the All Zero Penalty is messed up. Even more messed up is the No Open Loan Penalty.
FICO insiders justify these bizarre penalties by claiming that statistics show that folks who owe a little bit are slightly less likely to default than people who owe nothing.
I don't believe it. I'll bet the statistics show the opposite.
My theory as to the real reason for those penalties is that they are injected not for risk assessment purposes but for profitability assessment purposes; i.e. they are designed to weed out those of us who prefer not to borrow at all if we don't need to borrow, since that type of person is less likely to be profitable to a bank.
BTW even the insiders qualified their explanation, saying that people with small balances were "slightly" less likely to default. But in reality the penalties are not "slight" at all. Most of us would be looking at a built-in loss of 50 points or even more if we had all zero balances reporting on our revolving accounts, and no open loans. And this is without regard to how deep, broad, and flawless our reported credit histories were.
@Lexi0000 wrote:Thank you. I wasn't aware of this. This just confirm to me (again) that the whole system is corrupted and designed to keep you in debt your whole life. It's disgusting, really. I admire people who just pay cash for everything and do not have to depend on this messed up system! We should all aim to get out of it.
I think you need to rethink what you expect from credit. Your credit scores are designed to evaluate you for a lender. People who do not use their credit at all are less attractive than someone who uses the credit regularly and responsibly. There's a great Q&A from FICO insiders at the top of this forum that talks about this.
If you don't need or want credit, then don't apply for it. If you do want credit it is very easy to use these forums to learn how to maximize your scores and get it. So, not sure what you feel is corrupted about it.
