score dropped when the balance of a card increased from 80 to 300 (2.5% cu to 8.5% cu)

[photon]

A couple of weeks ago, my credit score (Equifax) dropped from 719 to 710.

It happend on the day when one of my credit cards reported a balance increase (from ~ 80 dollars to 300 dollars out of 3,000 dollar credit limit). It's still < 10% utilization and I always pay off my balance every month.  As for the credit utilization, I have a few more  cards and the total credit limit is almost 20,000 dollars (if not more), out of which my monthly balance (which I pay off full every month) is at most 500 dollars (usually less). That is, my credit utilization (as reported by card companies) is at most 2.5%. 

I was bitten by a similar drop (due to an apparently similar cause)  in the past and I tried to pay my credit card balance before a monthly statement comes out (so that the balance reported to credit bureau is very small - e.g. < 100 dollars), but sometimes timing doesn't work out and my reported balance can jump up  as happened last month (80 dollars -> 300 dollars).

Also on the day my score dropped, myFico score watch has the following:

<quote>

This score decrease may be caused by this new reason:

• You have multiple accounts showing missed payments or derogatory descriptions.

</quote>

However, this does not make any sense because that's not NEW at all. I have two accounts with the above problem which I took care of over 5 years ago. So, this has affected my score for the last 5 years with the decrasing degree (as they age off). I pulled off my Equifax report and there's no NEW report about 'missed payments or derogatory description' (I have paid everything on time since).

Given all these, the only thing that can possibly led to the drop of the score (from 719 to 710) is the increase in the reported balance ($80 to $300 out of 3,500 credit limit in one account). Is this expected?

Am I expected to keep my balance (as reported to the credit bureaus) almost zero every month (even though I pay off my full balance every month)?  I've been trying, but as I wrote above, sometimes I make a purchase right before the statement closing date and the amount ends up being added to the balance reported.  

[chasmith]

There are two components to utilization.

One is total - which is still well under 9%.

The other is per-card.  Your card is at 10% ($300 balance against a $3K credit line).  That's probably what caused the drop.

I'm trying to get to the following, which from my watching these forums seems to be likely to maximize my score.  Results may vary based on bucketing (I had a BK discharged just over a year ago so I'm probably bucketed differently than you are with a 719).

1. No single card at or above 10% utilization (or each card "less than 10%", ideally 9% or less)

2. Total utilization "less than 10%" (which will automatically happen when I achieve 1)

3. Zero balance on "half or more" of my cards.

All three factors seem to affect scores.

One thing I do to keep balance low or zero in the face of purchases just before reporting cutoff is to pay using my billpay service rather than the online pay feature of the CCC, because they won't let you pay more than the current balance.  There's still that 3-5 day window where you can't get a billpay posted, and the charge hasn't posted for you to do an online pay with the CCC.  So next time this is ready to happen you could send the $300 from a billpay service (I use Quicken Billpay, many banks have services also powered by Checkfree, which powers Quicken).

[OptimalCS]

photon wrote:

one of my credit cards reported a balance increase (from ~ 80 dollars to 300 dollars out of 3,000 dollar credit limit).

I'm thinking that this increase to $300 cost the drop. This put u at the 10% utilization mark. Stay below 10%.

[haulingthescoreup]

---

@photon wrote:

A couple of weeks ago, my credit score (Equifax) dropped from 719 to 710.

It happend on the day when one of my credit cards reported a balance increase (from ~ 80 dollars to 300 dollars out of 3,000 dollar credit limit). It's still < 10% utilization and I always pay off my balance every month.  As for the credit utilization, I have a few more  cards and the total credit limit is almost 20,000 dollars (if not more), out of which my monthly balance (which I pay off full every month) is at most 500 dollars (usually less). That is, my credit utilization (as reported by card companies) is at most 2.5%. 

I was bitten by a similar drop (due to an apparently similar cause)  in the past and I tried to pay my credit card balance before a monthly statement comes out (so that the balance reported to credit bureau is very small - e.g. < 100 dollars), but sometimes timing doesn't work out and my reported balance can jump up  as happened last month (80 dollars -> 300 dollars).

Also on the day my score dropped, myFico score watch has the following:

<quote>

This score decrease may be caused by this new reason:

• You have multiple accounts showing missed payments or derogatory descriptions.

</quote>

However, this does not make any sense because that's not NEW at all. I have two accounts with the above problem which I took care of over 5 years ago. So, this has affected my score for the last 5 years with the decrasing degree (as they age off). I pulled off my Equifax report and there's no NEW report about 'missed payments or derogatory description' (I have paid everything on time since).

Given all these, the only thing that can possibly led to the drop of the score (from 719 to 710) is the increase in the reported balance ($80 to $300 out of 3,500 credit limit in one account). Is this expected?

Am I expected to keep my balance (as reported to the credit bureaus) almost zero every month (even though I pay off my full balance every month)?  I've been trying, but as I wrote above, sometimes I make a purchase right before the statement closing date and the amount ends up being added to the balance reported.  

---

As mentioned, $300 is not <10% of $3,000. It's exactly 10% of $3K. The usual recommendation is 9% or less, and 9% is defined as exactly 9%, not 9.01%, so $270 or less on that particular card. Still seems like quite a drop, though.

Score Watch alerts are notoriously irrelevant. I still get that same one occasionally, and my lates are old. I used to freak, and now I roll my eyes. (After checking my reports, of course.)

Did you happen to pull a new report when the score dropped to 710? I wouldn't expect you to, but just in case... Did anything change in order on the negatives on screen 2?

Did an extra card report a balance, however small? For instance, usually two report balances, and this time there were three? That plus the higher balance on the other card would do it.

A final possiblity: have either your AAoA (average age of accounts) or longest history gotten a year older, and if so, which one and how old is it now? It's possible that you're now being compared to others with longer history, and the grading is a bit tougher.

[photon]

---

@haulingthescoreup wrote:

As mentioned, $300 is not <10% of $3,000. It's exactly 10% of $3K. The usual recommendation is 9% or less, and 9% is defined as exactly 9%, not 9.01%, so $270 or less on that particular card. Still seems like quite a drop, though.

A final possiblity: have either your AAoA (average age of accounts) or longest history gotten a year older, and if so, which one and how old is it now? It's possible that you're now being compared to others with longer history, and the grading is a bit tougher.

---

Thank you for replies.

Sorry that I made a typo in the 1st paragraph of my post.  The CL for the card in question is NOT 3k BUT 3.5k. (in the rest of my post, I wrote that it's 3.5k). So, 300 dollars is only 8.6% CU instead of 10% CU (as I wrote in the Subject line). 

Therefore,  if 10% CU is a critical landmark, the score drop I experienced cannot be accounted for by the balance of 300 out of 3,500 CL. 

I haven't checked whether AAoA or longest history got older by a year, but the last possibility you mentioned (me being compared to others with longer history) seems most likely because none of other possibilities is applicable to my case. (none of those happened).   Is this something related to 'being re-bucketted adversely affecting score'? It's not very intuitive (having longer AAoA or longest history - which is a good thing can lead to a score drop).....

[vanillabean]

---

@photon wrote:

Sorry that I made a typo in the 1st paragraph of my post.  The CL for the card in question is NOT 3k BUT 3.5k. (in the rest of my post, I wrote that it's 3.5k). So, 300 dollars is only 8.6% CU instead of 10% CU (as I wrote in the Subject line). 

Therefore,  if 10% CU is a critical landmark, the score drop I experienced cannot be accounted for by the balance of 300 out of 3,500 CL. 

---

The util of my one card with a balance is 9.91%, from which my score doesn't appear to suffer. But if it does, it should be quite comfortable in a few weeks at 1%. 

I don't know if 10% is critical at all; there's certainly nothing magical about the 50% cutoff.

[haulingthescoreup]

---

@photon wrote:

---

@haulingthescoreup wrote:

As mentioned, $300 is not <10% of $3,000. It's exactly 10% of $3K. The usual recommendation is 9% or less, and 9% is defined as exactly 9%, not 9.01%, so $270 or less on that particular card. Still seems like quite a drop, though.

A final possiblity: have either your AAoA (average age of accounts) or longest history gotten a year older, and if so, which one and how old is it now? It's possible that you're now being compared to others with longer history, and the grading is a bit tougher.

---

Thank you for replies.

Sorry that I made a typo in the 1st paragraph of my post.  The CL for the card in question is NOT 3k BUT 3.5k. (in the rest of my post, I wrote that it's 3.5k). So, 300 dollars is only 8.6% CU instead of 10% CU (as I wrote in the Subject line). 

Therefore,  if 10% CU is a critical landmark, the score drop I experienced cannot be accounted for by the balance of 300 out of 3,500 CL. 

I haven't checked whether AAoA or longest history got older by a year, but the last possibility you mentioned (me being compared to others with longer history) seems most likely because none of other possibilities is applicable to my case. (none of those happened).   Is this something related to 'being re-bucketted adversely affecting score'? It's not very intuitive (having longer AAoA or longest history - which is a good thing can lead to a score drop).....

---

Gotcha on the util. I didn't notice the other part, sorry.

Re-bucketing does sound counter-intuitive at first. I compare it to getting promoted by your teachers up an extra grade, because you've already pretty much mastered the one you're in and have gone about as far as you can. In your new classroom, you're going to be in a scramble initially while you catch up with where all the rest of your new classmates are. But once you do, you have the opportunity to advance a lot more than if you had stayed where you were.

An alternative comparison (for those of us with children who played competitive sports) is if you're the hot shot on your AYSO recreational soccer team. A club (traveling, competitive, fancy-uniform, whatever) team sees you and picks you up. (Your parents at this point start writing checks. A lot of checks.) Now that you have your new fancy uni and kangaroo leather boots, you proceed to spend a lot of time picking splinters out of your rear from sitting on the bench so much. But again, with time you become able to keep up with your new teammates and even put a few of them on the bench, and you wind up becoming a better soccer player.

Neither of these are a very good metaphor for the score drop that sometimes (but not always) accompanies re-bucketing. But they might distract you for a bit.

[creditchild]

hi, the same thing kind of happened to me. i try to tell people here

at myfico that no one can pin point excatly how this score thing works

everyone situation is diffrent. i have been taking advice here and playing

the score thing for months. i've tried the leave a certain amount of

utilization thing,i've tried leaving one cc with a balance thing,etc. and

the fico simulator is a joke! the more you try to figure all of it out the more

confusing it gets. the more good you do, the more your score goes down

its just the way it is. getting advice here is great,but again no one really knows

why and what your credit will do from month to month. it will drive you crazy. so my advice is

to just let the chips fall where the may. you charge to much you get dinged,you charge to little

you get dinged. you pay all your charges of at the end of the month you get dinged,you don't pay

you get dinged. its nuts!!!!!!!!!