double counting on credit cards.

redcurls666 · ‎06-14-2011

I noticed something interesting on my EQ report. When listing reasons for the lousy score (dropped 50 points this month, ? why). It stated credit cards with balances as one reason and then on the next line it listed accounts with balances. That just counted my credit cards twice, plus it counted my deferred student loans in the second part. Some of my cards have a balance under $50, and my overall card usage is 43%. But it seems that doesn't matter much. I dropped my credit usage last month from 68 to 43%. I would have expected my score to increase like the other agencies, but instead it dropped. EQ does not seems to play fair, but half the credit companies use them. This is from FICO. When I use the FACO scores, they count percentages not number of accounts and my score is higher. I have to raise my score 20 points to get a business loan, this is annoying.

I don't get it.

Any reasons for this??

llecs · ‎06-14-2011

Are you referring to the pos/neg reasons listed in your FICO report (pages 2&3)? If so, would you mind listing out exactly what it says for the negative reasons?

Lenders give input on FICO, and having multiple cards reporting a balance isn't a good thing, even if the balance is very low. In the lenders' eyes, you are a risk because you are using your cards to get by. You can eliminate that issue by timing your payments in relation to how that CC reports. Most of your cards will report the balance you had on the statement date. The key to fixing it is to make sure the balance reads $0 on the statement date and to get a payment in before the statement cuts (or don't use them between the due date and the statement date). Some cards like US Bank and HSBC/Orchard are oddballs in reporting, though.

Your utilization is high. For best results, get all of your cards but one to $0 and get the remaining to a balance on that one to show under 9% of that card's CL. You can certainly use more each month, but timing the balance and the balance's reporting is important per FICO scoring. I bet if you went from 43% down to what I said, you'd see over a 50 point gain on EQ with a smaller gain on TU, all else being equal.

redcurls666 · ‎06-30-2011

Hi:

Sorry for the delay. I thought I had posted this already, but apparently I didn't.

On the EQ report it lists a tag for Understanding your score. In that area it has a scale, the left side lists factors that lower your score, the right side lists the ones that increase it. The left side lists:

1. High usage

2. New accounts

3. Credit card balances

4. Accounts with balances

3 and 4 are both counting credit cards. To me that is double counting. Not only that, 4 includes my student loans, which I thought were not to be considered.

Equifax has always been a thorn in my side for some reason. TU an EX have my score in the 650 range. EQ has it at 585. There are no bad things on my credit report and I have a perfect payment history, accounts over 10 years old, 5 cards with a zero balance and some with an 80% ut. About 6 years ago or so, my EQ score dropped over 100 points in one month. No I am not kidding. It went from a 667 to a 552 in ONE month. EX and TU did not, and there was no change in my report at all at the time, not a few months earlier either. Since that time I have been fighting tooth and nail to get that thing back over 600. EX and TU remain fairly consistent. But EQ has not. I guess I fell into one the those suspected tiers (buckets) and I am losing the battle with the other fish in the barrell. It becomes quite annoying to play this game when most creditors use EQ, and I just had to get my score over 650 to get a business loan. The only problem anybody can ever find on my report is the ut on some of my cards. But what I have seen is they calculate the credit card percent utilization - mine is currently about 43% I think. BUT then they turn around and also calculate the percentage of debt to available credit, and that is double counting - mine is about 65% (the bank wants it under 50%). So all that transfering from one card to another in order to get more zero balances was a waste of time because it will not change the available credit to debt ratio at all. Now I have to start from square one to get my score up.

My income is not increasing anytime soon so paying off cards is not an option. If it was, they would have been paid off already. So to me, EQ is not playing fair.

llecs · ‎06-30-2011

Numbers 3 and 4 are two different items. #3 can refer to two different things. If it lists the utilization, then FICO letting you know that your util is too high. If it just says that your CC balances are too high, then it's just that, your CC balances are too high. #4 is different. FICO likes to see $0 balances. The #3 reason is saying that you have too many accounts (e.g. CCs, mortgages, SLs, loans, or whatever else is reporting) that are reporting a balance. You'll sometimes see that comment go away once more than half of your balances report $0.

Your CC utilization is way too high. It's dinging you at the #1 slot. If you paid down your CCs from where they are now and pay ALL of them to $0 except for one CC, and pay that one CC down to a level of less than 9% of the CL, then you'd see some large gains (I think I mentioned 50+). In fact, paying down your CCs will fix #1, #3, and likely #4 (depends on your TLs and how many of them are non-CCs). Aside from util, you can easily see more of a gain than mentioned.

IMO, balance transfers are a waste of time. It's reshuffling the same old debt. If you get $0 balances, then your balances on your other CCs go up. FICO looks at individual and overall util. So, if you jack up the util on a car that carries a balance, then your score can take even more of a hit. The fastest (and not always the easiest) way to bring down util is to pay it off. Those new accounts are really dinging your score too. Give it time and you'll see a gradual rise in points.

redcurls666 · ‎06-30-2011

Hi:

#3 says too many credit cards with balances. But also when I look at #4 (too many accounts with balances) in detail it lists/counts all of my accounts with balances including the credit cards. That is what I mean by double counting- they are counting my credit card balances in 2 separate calculations. #4 counts my student loans and credit cards, because I have nothing else. My mortgage was paid off and my car is old so the loan dropped off.

But every time I take out a student loan, there is a new account, and another maxed out balance, so if they are counting student loans, then I don't see #4 going down any time soon. It is just frustrating the way EQ calculates it. If everyone tells you the most important thing is to pay accounts on time (35% of score), then the other factors shouldn't factor as much. My perfect payment record doesn't seem to help because they are counting these others way too much and some twice.

p- · ‎06-30-2011

@redcurls666 wrote:
I noticed something interesting on my EQ report. When listing reasons for the lousy score (dropped 50 points this month, ? why). It stated credit cards with balances as one reason and then on the next line it listed accounts with balances. That just counted my credit cards twice, plus it counted my deferred student loans in the second part. Some of my cards have a balance under $50, and my overall card usage is 43%. But it seems that doesn't matter much. I dropped my credit usage last month from 68 to 43%. I would have expected my score to increase like the other agencies, but instead it dropped. EQ does not seems to play fair, but half the credit companies use them. This is from FICO. When I use the FACO scores, they count percentages not number of accounts and my score is higher. I have to raise my score 20 points to get a business loan, this is annoying.

I don't get it.

Any reasons for this??

Your utilization is pretty high. You want to be at 0 on all but one card and between 2-9% on one card. Make sure you are never over 9% total utilization and you will get the most out of this portion of your score.