score dropping while carrying no balances whats up!

[Geordi]

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@sam3552 wrote:

i don't get it my score has gone from a 767 to a 737 in 3 months yet i pay my balances of every month, is anyone else seeing this

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First of all, FICO doesn't pay anyone's bills.
Second, FICO scoring is a calculation made be the CRAs.

Quit worrying whether or not your score changes from one month to the next. Pay your bills on time; use credit responsibly. Your FICO scores are only important when you are looking to apply for some type of loan; purchase a cell phone; or etc.

Please try to keep in mind the primary goal of FICO: to numerically demonstrate your credit risk to potential and current lenders.

Seriously, is there any difference (other than psychological) if you have a grade of 96.2% or 96.6%? Both scores will get you an A.

GL

Message Edited by Geordi on 09-30-2008 05:46 AM

[Anonymous]

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@Geordi wrote:

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Seriously, is there any difference (other than psychological) if you have a grade of 96.2% or 96.6%? Both scores will get you an A.

GL

Message Edited by Geordi on 09-30-2008 05:46 AM

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If 740 is the magic number (and it is the case for many lenders), it can make a huge difference.

[Anonymous]

Your utilization may still be affecting your score.  Most CCC report the balance at the end of a statement period, so even if you pay the card off each month, the statement balances are still being reported.  I assume that is what is happening since I believe I read that you are paying off the statements.  So if your utilization is high, it will affect your score even though you pay it off every month.

Unfortunately, I don't think the credit agencies can tell if you pay your bill off every month; all they can see is that you are making payments on time and what your balance is.

[Anonymous]

I know it's hard, but try not to obsess over your FICO score. A 30 point fluctuation isn't unusual, and the scores will vary among the reporting agencies. I've seen them vary by more than 100 points between the agencies.

The people who are telling you to always carry at least a small balance are probably well-intentioned, but misguided and don't understand the way the scoring model works. If you're going to use credit, never carry a balance. Pay the balance in full no later than your due date.

Since part of FICO scoring depends on your use of available credit, it's not dependent on whether you PIF (which you should). Take a credit card for example. If you have a limit of $10,000, and you have $1,000 on the card, and pay it off, the company doesn't immediately report that. They all work on a schedule, and the schedule isn't dependent on what you do, it's just their reporting procedure. It is NOT based on what your balance was as of your last billing cycle, but the balance as of whenever they do their reporting, which is typically monthly, but sometimes more often. So, if you pay off your $1,000 balance, but run up $7,000, putting you at 70% of available credit, and that happens to fall during their reporting cycle, your score will drop. It doesn't mean you aren't paying your bills on time. It simply means you're using a large amount of your available credit.

You could check your FICO scores every week with all three agencies, and you'd see variations. Minor fluctuations like this are nothing to be concerned about. Major fluctuations warrant some investigation to see what caused them.

[Anonymous]

So are you saying paying balance down to zero will have a positive effect in the short run. I am trying to purchase a house in 6 months and planned on paying down to a zero balance all all but 2 cc moving from owing 10k to est $4500. Currently in the mid 600 range. What advice would you or anyone offer to me?

[Anonymous]

Yes, the same happened to me on my credit score.  It went down almost twenty points, and I have never been late on my payments.  So I do not know what's up.

[haulingthescoreup]

Your util (amount owed divided by credit limit) is calculated on the balances reported by your CC companies. (I'm saying CC's, because it's revolving util we're talking about.)

Even if you pay in full every month, if you wait for your statement to arrive online or in the mail, as sensible people do, that balance is reported to the CRA's (credit bureaus) and used to calculate your util. So it looks like you're carrying balances from month to month when you don't.

The easiest way around this is to pay all but one or two CC's online 4-5 days before each one's next statement comes out, and pay the other(s) down to a very low figure, well under 10% of that card's CL. Let these balances report (show up on your statement), each on their own schedule, and then pay them off. Almost all CC's update on statement date, except HSBC/Orchard bank cards and some quirkiness by AmEx. And this is the statement date, NOT the due date.

I don't find it hard to do this --I see no appreciable difference between paying on the 3rd instead of on the 8th or something --but many find this too high-maintenance. If so, that's fine; just crank this up when you're getting ready to apply for something. Only two problems with that: it takes a minimum of a month to get all your accounts to report these low or $0 balances, plus get the CRA's to update; and in this day and age of CCC's running scared, I don't want them to see that I have balances. They have very itchy trigger fingers these days.

[Anonymous]

FICO is lame computer modeled garbage. It is a tool to allow lenders to be lazy. It's not about true accuracy. If lenders were cautious we wouldn't have had a housing bubble and the currently problems in the economy.

[Anonymous]

I also pay off my balances every month, but have noticed if I charge more throughout the month than before and it shows up on my report, my score will drop 5-10 points. I think the system assumes I will carry the balance rather than paying it off.