Why did My (FICO) score just dropped 6 points if all my cards have no balances????

[AJ1979]

OMG! I'm completely devastated and highly disappointed; yesterday I got an email indicating my score went from 698 to 686. Why and how could this be? I haven't been using my cards in about 4 months and the scores have been on the rise since Oct. In Nov my EQ was 672, Dec 686, Jan 692 now back to 686.

The email I got yesterday from (scorewatch@myfico.com - Score Watch Alert (FICO score change: - [6]) stated (Your FICO® score went down on a day when there were no credit alerts on your Equifax Credit Report™. This can happen if:

• There was a change on your credit report that lowered your score but did not trigger an alert. For example, the balance on an account might have increased enough to lower your score, but not enough to trigger a balance increase alert. 
• You moved from one category of credit users to another as time passed. For example, you may have transitioned from the category "consumers with a new credit history" to the category "consumers with a two- to five-year credit history". As a result, your credit report is evaluated differently, causing a slight change in your score. The good news is that moving between categories like this usually offers you the potential to reach a higher FICO® score in the future.) 

The second email I got today from (Member.Benefits@equifax.com - Score Watch(TM) - Update) says (For the last month, Score Watch(TM) has been monitoring your credit file for key changes, including those that could affect your credit score. This e-mail is to inform you no credit file or score changes which met your alert preferences were reported in the last month. If any key changes are reported, we will notify you via e-mail).

I haven't owed anything in over 4 months and I recently used some cards last week. The only reason why I used them is because someone told me if I didn't my score would drop if there was no activity; but in my opinion it seemed to be on the rise when I wasn't using it?

During the last 2 weeks I used Capital One $141 (CL - $800), Macy's $25 (CL - $200) Orchard Bank $152 (CL - $400). I don't understand why it went down 6 points. I have no recent lates, balances, inquires or new credit. Can someone please help me understand? I'm on the verge of breaking down! I've been saving my money for months......

I want to by a condo after I reach 780 but I'm not going to get there if this keeps happening. What are the rules for using your card and maintaining your score? I thought if you keep them below 30% and pay them of before the due date everything would be fine? How can we progress if everything is a secret?

TransUnion/Jan 2008 - 764

Experian/Jan 2008 - 743

Exquifax/Jan 2008 - 698

Message Edited by AJ1979 on 02-02-2008 06:49 PM

[haulingthescoreup]

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@AJ1979 wrote:

Your FICO® score went down on a day when there were no credit alerts on your Equifax Credit Report™. This can happen if:

You moved from one category of credit users to another as time passed. For example, you may have transitioned from the category "consumers with a new credit history" to the category "consumers with a two- to five-year credit history". As a result, your credit report is evaluated differently, causing a slight change in your score. The good news is that moving between categories like this usually offers you the potential to reach a higher FICO® score in the future.

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You've been moved to a new score bucket. When it happened to me, I lost 15 points in a blink. Mine occurred after I added on to a card with an 18-year history. And you're right, it's absolutely devastating when it happens.

My scores had completely recovered around 4 weeks later, and they have since moved on far beyond where they were when it happened in October. It really does allow your scores to go higher over the long run.

Just to briefly try to explain score buckets (scorepools, etc): All of us are compared with our "credit peers." There are currently 10 different groups of peers, soon to be 12. These include such groups (among others) as those brand new to credit, those with a bankruptcy, those with credit 13 years or longer, those with "thin files" (few credits.) Periodically you move from one group to another, when you acquire or lose a serious derogatory, when your overall credit history ages you into a new group, etc. "Score bucket" is one of the slang terms for these credit peer groups.

If there weren't some version of score buckets, those new to credit would be doomed to scores in the 400's and 500's for decades, because those with long-established clean credit histories would sit up there in 800 land forever. It would be difficult to move up unless and until one of them, well, died off.

[haulingthescoreup]

And that second e-mail, that comes from Equifax rather than myFICO, confirms my belief that you will only find out about re-bucketing from the myFICO version of Scorewatch.

BTW, did those new balances post yet? I assume not, since you just used your cards last week. It's true, having all $0 balances generally hurts your scores. You only need to have one report a balance to help your score. So check your statements and statement dates, and if they haven't shown up yet, you can go ahead and pay off all but one BEFORE their statement dates. (Your credit cards generally report to the credit bureaus on their statement dates, so if you pay them off before them, a $0 balance will report. This is true of most CCC's, although not all.)

If the cards haven't reported a balance in a long while, you might also get a tiny and temporary ding for an old account suddenly being used again. Don't panic, that goes away very quickly (by the next month, in my experience.)