score decline for account balance (even though balance always paid in full)

[Anonymous]

My credit score keeps dropping (from 704 now 680) every time a credit card account posts a balance. It doesn't seem to matter that I'm a convenience user, and I pay my balance in full, have not made a late payment or paid a dime in interest. This happened between July 09 and now. I will bet that if I simply don't use the cards at all and leave the balances at zero, my score will not return to 704 very quickly. This just doesn't seem right to me.

Any suggestions?

[Lel]

How large are the balances posting compared to your card's credit limit?  And what is your overall utilization of avaiable revolving credit?

Even though you PIF you credit card accounts, it is the reported statement balance that is used to calculate your utilization.  So, if in one month you have a balance of $100 on a $1000 CL card, a utilization of 10% will be calculated.  If in subsequent months your statement balance is higher - for example, $900 - this number will result in a higher utilization, and thus a lower score.

Also, look at your credit reports to make sure that nothing else has changed. 

[MarineVietVet]

---

@Anonymous wrote:

My credit score keeps dropping (from 704 now 680) every time a credit card account posts a balance. It doesn't seem to matter that I'm a convenience user, and I pay my balance in full, have not made a late payment or paid a dime in interest. This happened between July 09 and now. I will bet that if I simply don't use the cards at all and leave the balances at zero, my score will not return to 704 very quickly. This just doesn't seem right to me.

Any suggestions?

---

Welcome to the forums.

As Lel said it's the amount that reports on your statement each month that matters.

Optimal credit utilization for FICO scoring purposes seems to be:
Total revolving utilization > 0 and < 9%, the lower the better, and
Reporting a balance on less than half of your revolving TL's, and
Reporting a balance on half or less of all TL's.

From a BK years ago to:
7/09 TU-742 EQ- 779
8/09 TU-765 EQ- 783
9/09 EX pulled by lender 802

You can do the same thing with hard work.

[Anonymous]

This is one of the many things that I've learned here. Even though you pay your bill in full you're still getting dinged on your credit report if you don't pay before the statement date. Notice I said statement date and not due date. If you get a bill and it says you owe $900 that's what gets reported to the CRA even though you paid the thing in full. I had the same situation since I pay my balances in full each month as well. You need to pay your bill so when your statement shows up it says you owe $0. It's idiotic but so are most things where credit reporting are concerned.

[haulingthescoreup]

If the CRA's would agree to report the balance as of the due date (and if the lenders would be willing to report this amount), we wouldn't have this issue.

But since FICO scores are generated off of what's on the credit reports, we're stuck with it.

Many people don't have such a dramatic score swing, but for those who do, it can definitely be worth paying several days before the statement is due to post.

[MattH]

---

@haulingthescoreup wrote:
If the CRA's would agree to report the balance as of the due date (and if the lenders would be willing to report this amount), we wouldn't have this issue.

But since FICO scores are generated off of what's on the credit reports, we're stuck with it.

Many people don't have such a dramatic score swing, but for those who do, it can definitely be worth paying several days before the statement is due to post.

---

My wife and I pay in full when we get the statement, since even in a month when we've spent a lot our balances rarely hit 10% of the credit limits, but we agree this is silly.  My scores bounce around within a range of maybe plus-or-minus 10 or 15 points as balances fluctuate; does this really mean the risk that I would default on any debt fluctuates from month to month?  For my wife and me, this is merely a nuisance since our scores are well above any lender cutoff we've ever heard about, but for somebody closer to some cutoff this could be a big deal.  I wonder how many loan officers know about this aspect of FICO scoring and advise their clients to prepay credit cards for a few months prior to applying in order to goose their scores?  Certainly I did not know about this until I learned it on these forums!

[Anonymous]

---

@Anonymous wrote:

My credit score keeps dropping (from 704 now 680) every time a credit card account posts a balance. It doesn't seem to matter that I'm a convenience user, and I pay my balance in full, have not made a late payment or paid a dime in interest. This happened between July 09 and now. I will bet that if I simply don't use the cards at all and leave the balances at zero, my score will not return to 704 very quickly. This just doesn't seem right to me.

Any suggestions?

---

Welcome to the forums.!

Assuming there's not something else going on your haven't told us about this is a UTIL problem and your score will return to it's previous level as soon as your UTIL returns to its previously reported amounts. UTIL changes effect your score immediately, both up and down, and are the easiest way for you to influence your score.

[Anonymous]

---

@haulingthescoreup wrote:
If the CRA's would agree to report the balance as of the due date (and if the lenders would be willing to report this amount), we wouldn't have this issue.

But since FICO scores are generated off of what's on the credit reports, we're stuck with it.

Many people don't have such a dramatic score swing, but for those who do, it can definitely be worth paying several days before the statement is due to post.

---

I would prefer they stick with the statement date and not the due date.