Why is my score going up???

[ny7007]

Lately, for about the past 8 weeks or so, I keep getting messages from Scorewatch that when I do something right, my score goes down; but when I do something wrong, my score goes up.  Examples: I had four checking accounts--two at a credit union and two at a bank.   Each checking account had a line of credit (not a HELOC) attached for $2000 each.  I never used any of the accounts (checking or overdraft protection lines of credit), so I recently closed all of them.  The booklet online here said never close credit accounts, but I got sick of keeping track of so many accounts. I also closed any savings accounts at the same bank/CU.  My score went up when each bank/CU reported the closures. 

I read that it is good to have a gas card for FICO scores, that gas cards are in a category all by themselves.   I've been using a Mobil card now for several years.  Sometimes it reports a high balance and I get a negative, sometimes it doesn't, even though I pay the entire balance each month.  Lately, the Mobil stations have been closing in my area and being replaced with Valero gas stations, so we've been using more cash.  However, when I use the Mobil gas card for about $550 a month to fill up four vehicles in the family (it used to be about $750), I get dinged for having a balance, even though my available balance is supposed to be around $2000.

I have a Kohl's card.  Whenever I use it, no matter how small (less than $150) on an $1800 balance, I get a negative on my credit score according to SW, yet I've been reading on these forums that it's good to have a small balance on revolving cards.  

I took out a Lane Bryant card about 3 months ago to get a 20% discount on a large purchase.  I paid the balance off within about two weeks with a check.  I got a small ding for the inquiry back then, which I expected.  I haven't used it since.  They reported a few days ago (I don't know about what) and my score went up about 3 points. 

Incidentally, a few months ago, I consolidated 7 PLUS loans into one PLUS consolidation loan.  Instead of positive points, I got dinged. 

What is going on here?  None of this makes sense to me.  Should I not use the gas card or the store cards at all and just stick them in the sock drawer?  My regular revolving Visa card doesn't do this to me.  They rarely report anything, even though I have carry a balance of about $3000 on an $18,000 limit.

Don't you get any "extra credit" for paying off loans?

Thanks for any advice in advance.

[Anonymous]

From what I've heard, department store credit cards are much riskier than "normal" credit cards (e.g. Visa, Mastercard, etc.) issued by financial institutions. 

[sarcasm] Financial institutions are a much safer bet; who needs steel and concrete when you've got all that subprime-mortgage backed security paper making great foundation material in your balance sheet.[/sarcasm]

At any rate, I would suppose FICO reflects the "riskier" reflection of department store cards in their score calculations.

I stopped trying to make logical sense of the FICO scheme a long time ago.   There are so many contradictions it can make you go crazy.   If you want a high score I would ditch the store cards and get a "regular" credit card and regularly use it, keeping it below 7 to 10% of the credit limit; within 2 or 3 years you'll have high-700's if not 800.

PLUS loan consolidation I believe is considered a student loan, and has little effect on FICO.   I paid off $32,000 in subsidized consolidated student loans in the past 3 years and the score didn't bat an eye.   However, when I paid off the car loan, I got back most of the 15 points I lost when the loan was initially created.

Dan

[Anonymous]

Timothy nails it when he says "understanding fico scores is an oxymoron."

[Anonymous]

A couple of quick comments:

1) A 550 balance on a 2000 CL is a negative, it is 28 percent utility (not horrible but not a positive). Also when you use revolvers you don't normall use and the balance posts you have more accounts with balances (a negative). It is good to have A store or gas card, no one on here advocates a need for multiple card of this type or for letting a balance report on them (different than using the card and paying before the statement).

2) I don't know why your scores go up and down in some of the incidents above but there are likely MULTIPLE factors, because it is likely more than one thing in your report has changed.

3) If your utility didn't change brackets that explains why you weren't digned for closing LOC's. You MIGHT take a small hit when those accounts drop off your credit report in 10 years....in the meantime you still have that history so you are not hurt if your utility remains in the same scoring bracket.

4) As for paying off loans you don't usually get credit if it is your only loan. You often lose points for no longer having an open installment loan. If you are consolidating loans, you still have a loan with high utility, so you won't get credit for closing out small loans but still having one with high utility (you may even lose points for being maxed out on one whereas before you had 7 with 50% utility). I am not saying this is fair, it is just how the formula works.

I don't know if that explains all the changes, but it just illustrates how your report can change multiple times a week and there is more going on than you think.

[ny7007]

OK, so I guess the thing is to have the credit cards (Mobil, Kohl's, Lane Bryant) but don't actually use them unless I can pay them off before I get the statement saying how much I owe.  Sounds complicated. I should just use cash, I guess, or use the card to get the 15% discount at the time, then walk down to Customer Service at the store and pay it off immediately, or use only one main Visa or Mastercard.  I can do that.  As for the loans, based on what everybody said, I do have an auto loan that should probably be paid off before the PLUS consolidation loans if I'm looking for a bump up in my score.  That's good to know.  Thanks everyone!