Credit scores fell this month a lot for no reason

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Post Reply
vmsx
Posts: 37
Joined: Wed Jan 07, 2015 6:48 pm

Credit scores fell this month a lot for no reason

Post by vmsx » Tue Oct 17, 2017 8:02 pm

I monitor my scores via various credit cards for all 3 bureaus, getting the FICO Score 8 numbers.

My scores are typically 820-840 but this month they all fell into 780s-799. My utilization % is 0, no inquiries, and I made no charges more than $200.
I have a 25+ year history. My only negative repeatedly pointed out now and over the years is lack of installment and mortgage loan history. (Basically, I just have a lot of credit card accounts, that I use and pay off immediately, I rarely go over 1% utilization.)
This is the first time I've ever seen any FICO for me under 800 in well over a decade that I've checked them. (Contrawise: credit karma/sesame Vantage FAKOs are all 830s still, updated today.)

It seems there was a big change in how FICO is calculated.

Anyone else know what might be going on or have a similar result? It's more a curiosity for me as I have no need for credit.

PFInterest
Posts: 389
Joined: Sun Jan 08, 2017 12:25 pm

Re: Credit scores fell this month a lot for no reason

Post by PFInterest » Tue Oct 17, 2017 9:52 pm

did you pull your credit to make sure nothing was changed?

JBTX
Posts: 1522
Joined: Wed Jul 26, 2017 12:46 pm

Re: Credit scores fell this month a lot for no reason

Post by JBTX » Tue Oct 17, 2017 11:15 pm

vmsx wrote:
Tue Oct 17, 2017 8:02 pm
I monitor my scores via various credit cards for all 3 bureaus, getting the FICO Score 8 numbers.

My scores are typically 820-840 but this month they all fell into 780s-799. My utilization % is 0, no inquiries, and I made no charges more than $200.
I have a 25+ year history. My only negative repeatedly pointed out now and over the years is lack of installment and mortgage loan history. (Basically, I just have a lot of credit card accounts, that I use and pay off immediately, I rarely go over 1% utilization.)
This is the first time I've ever seen any FICO for me under 800 in well over a decade that I've checked them. (Contrawise: credit karma/sesame Vantage FAKOs are all 830s still, updated today.)

It seems there was a big change in how FICO is calculated.

Anyone else know what might be going on or have a similar result? It's more a curiosity for me as I have no need for credit.
If you use your credit cards, how can you have a utilization of 0%?

You didn't close any accounts, did you?

Also this:

https://www.nerdwallet.com/blog/finance ... -pay-debt/
The second-most-important factor, credit utilization, is the reason your credit may drop a little after you pay off your debt. Having low credit utilization (30% or less) is good; having no credit utilization may be harmful to your score.

User avatar
whodidntante
Posts: 2198
Joined: Thu Jan 21, 2016 11:11 pm

Re: Credit scores fell this month a lot for no reason

Post by whodidntante » Tue Oct 17, 2017 11:20 pm

I get a FICO 8 score for free and it has not changed much.

MikeG62
Posts: 507
Joined: Tue Nov 15, 2016 3:20 pm
Location: New Jersey

Re: Credit scores fell this month a lot for no reason

Post by MikeG62 » Wed Oct 18, 2017 7:42 am

My experience is similar. When I worked and had a mortgage, my score was consistently around or above 830. Mortgage paid off several years ago and no installment debt. Score has slowly crept down - now in the low 800's (even saw one score in the high 700's). I have a lot of CC's and charge almost everything to my CC's. CC's are paid in full each and every month. Maybe at its high point (near the end of the month, when there are almost two full months of charges) my utilization may get in the high single digit % (averaging between maybe 5% and 10%)

I began leasing a car this summer and hope this qualifies as installment debt and results in my credit score creeping back up.

It's not something I obsess over. However, it is maddening that someone with as money as I have and a sterling payment history would not have the highest possible credit score. I have friends and family members who live on credit (with all sorts of debt) whose credit scores as higher than mine. Just seems like somehow the CRA's are not thinking about this right. There is zero risk in extending me credit.

User avatar
jhfenton
Posts: 2177
Joined: Sat Feb 07, 2015 11:17 am
Location: Ohio

Re: Credit scores fell this month a lot for no reason

Post by jhfenton » Wed Oct 18, 2017 7:50 am

MikeG62 wrote:
Wed Oct 18, 2017 7:42 am
There is zero risk in extending me credit.
The scores aren't entirely designed to estimate your risk. They're designed to rate your attractiveness as a credit customer. Your risk level is only half of that picture. :beer

I can't imagine how I would get to 0% utilization while using our cards. We run a few thousand a month through our Amex and pay it off every month. And every month, they report the statement balance as our outstanding balance. So our utilization on that card is effectively >10%, even though we pay it off.

Grt2bOutdoors
Posts: 17138
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: Credit scores fell this month a lot for no reason

Post by Grt2bOutdoors » Wed Oct 18, 2017 7:59 am

MikeG62 wrote:
Wed Oct 18, 2017 7:42 am
My experience is similar. When I worked and had a mortgage, my score was consistently around or above 830. Mortgage paid off several years ago and no installment debt. Score has slowly crept down - now in the low 800's (even saw one score in the high 700's). I have a lot of CC's and charge almost everything to my CC's. CC's are paid in full each and every month. Maybe at its high point (near the end of the month, when there are almost two full months of charges) my utilization may get in the high single digit % (averaging between maybe 5% and 10%)

I began leasing a car this summer and hope this qualifies as installment debt and results in my credit score creeping back up.

It's not something I obsess over. However, it is maddening that someone with as money as I have and a sterling payment history would not have the highest possible credit score. I have friends and family members who live on credit (with all sorts of debt) whose credit scores as higher than mine. Just seems like somehow the CRA's are not thinking about this right. There is zero risk in extending me credit.
There is always risk in extending unsecured credit. If you choose not to pay, even if you have the means to pay, then the lender is forced to take action which reduces their return on capital in the form of higher costs. A secured credit may still choose not to pay, but in that instance the bank has a lien on security. Depending on the types of collateral, the lender can be made whole after expenses or still take a haircut on some portion of the credit extended. For those reasons, there is risk. A true no risk credit would be one where there was an abundance of collateral far exceeding the amount of credit extended and it was held by the lender making liquidation and recovery of amounts owed seamless.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

The Wizard
Posts: 11004
Joined: Tue Mar 23, 2010 1:45 pm
Location: Reading, MA

Re: Credit scores fell this month a lot for no reason

Post by The Wizard » Wed Oct 18, 2017 8:36 am

jhfenton wrote:
Wed Oct 18, 2017 7:50 am
MikeG62 wrote:
Wed Oct 18, 2017 7:42 am
There is zero risk in extending me credit.
The scores aren't entirely designed to estimate your risk. They're designed to rate your attractiveness as a credit customer. Your risk level is only half of that picture. :beer

I can't imagine how I would get to 0% utilization while using our cards. We run a few thousand a month through our Amex and pay it off every month. And every month, they report the statement balance as our outstanding balance. So our utilization on that card is effectively >10%, even though we pay it off.
You can get closer to 0% utilization by logging into your CC account and paying off your balance multiple times per month.
If you do this right before your balance gets reported to the credit agencies, then you have 0% utilization for that month even though you just paid off a few thousand dollars of recent charges...
Attempted new signature...

tomd37
Posts: 2618
Joined: Thu Mar 01, 2007 10:39 pm
Location: Middle Tennessee

Re: Credit scores fell this month a lot for no reason

Post by tomd37 » Wed Oct 18, 2017 8:37 am

I can see how a zero utilization rate is possible on credit cards. The amount of your monthly bill when issued is what is reported on credit reports. You can arrange to pay that amount on the same day as your bill is issued and you could then have a zero balance and utilization rate. I charge virtually everything to my two credit cards and if I see that I will have a significant balance(over 10% of my credit limit) about to be billed I consider making an advance payment to lower that balance to a respectable amount.

Edit: The Wizard and I were writing at the same time.
Tom D.

User avatar
jhfenton
Posts: 2177
Joined: Sat Feb 07, 2015 11:17 am
Location: Ohio

Re: Credit scores fell this month a lot for no reason

Post by jhfenton » Wed Oct 18, 2017 8:41 am

The Wizard wrote:
Wed Oct 18, 2017 8:36 am
jhfenton wrote:
Wed Oct 18, 2017 7:50 am
MikeG62 wrote:
Wed Oct 18, 2017 7:42 am
There is zero risk in extending me credit.
The scores aren't entirely designed to estimate your risk. They're designed to rate your attractiveness as a credit customer. Your risk level is only half of that picture. :beer

I can't imagine how I would get to 0% utilization while using our cards. We run a few thousand a month through our Amex and pay it off every month. And every month, they report the statement balance as our outstanding balance. So our utilization on that card is effectively >10%, even though we pay it off.
You can get closer to 0% utilization by logging into your CC account and paying off your balance multiple times per month.
If you do this right before your balance gets reported to the credit agencies, then you have 0% utilization for that month even though you just paid off a few thousand dollars of recent charges...
True. I used to make multiple payments per month, but I decided it was too much hassle for no benefit. Between our 3 credit cards, we have single digit utilization. Beyond that we only have a small mortgage relative to our income. Our scores would probably go up if we had more varied credit.

TJ89
Posts: 2
Joined: Thu Sep 21, 2017 1:37 pm

Re: Credit scores fell this month a lot for no reason

Post by TJ89 » Wed Oct 18, 2017 8:46 am

Over the last six months mine has ranged from a high of 855 to a low of 800. Looking today it dropped from 842 last month to 821 today. I can see no rhyme or reason to the changes, but as it is a proprietary algorithm they're pretty close-mouthed about what causes what.

User avatar
flamesabers
Posts: 1463
Joined: Fri Mar 03, 2017 12:05 pm
Location: Rochester, MN

Re: Credit scores fell this month a lot for no reason

Post by flamesabers » Wed Oct 18, 2017 8:53 am

vmsx wrote:
Tue Oct 17, 2017 8:02 pm
Anyone else know what might be going on or have a similar result? It's more a curiosity for me as I have no need for credit.
Did you have any closed credit card accounts that dropped from your report recently and thereby caused a decline in your average age of accounts?

takeshi
Posts: 1112
Joined: Thu Oct 03, 2013 10:02 pm

Re: Credit scores fell this month a lot for no reason

Post by takeshi » Wed Oct 18, 2017 9:03 am

vmsx wrote:
Tue Oct 17, 2017 8:02 pm
Anyone else know what might be going on or have a similar result?
You would have to carefully review reports from before and after the change to determine the cause(s). That said, a change of that magnitude is typically due to derogatory information or a spike in revolving utilization as these are the biggest scoring factors.
vmsx wrote:
Tue Oct 17, 2017 8:02 pm
It seems there was a big change in how FICO is calculated.
The FICO 8 scoring model didn't change. There is a FICO 9 that some creditors are now offering and using but that's an entirely different scoring model. The change would be in your credit report data. Since you mention Credit Karma, take a look and see if you can tell if anything changed using it. If not, Credit Check Total will give you FICO 8's and reports for all 3 with their $1 trial and you can cancel during the trial.
vmsx wrote:
Tue Oct 17, 2017 8:02 pm
I monitor my scores via various credit cards for all 3 bureaus, getting the FICO Score 8 numbers.
Who are you using? I am aware of options for FICO 8's for Experian and TransUnion but not for Equifax. There are Equifax FICO's out there from creditors but they're not FICO 8's to my knowledge. Citi provides a FICO 8 Bankcard but it's not the same thing as a FICO 8. DCU's is a FICO 5. PenFed switched a bit back from FICO NextGen to FICO 9.
vmsx wrote:
Tue Oct 17, 2017 8:02 pm
My utilization % is 0
$0 balances on all cards on your reports or $0 current balances? There is a hit for having all your cards report 0 balances. However, be aware that paying in full doesn't mean that you have a $0 balance reporting. Most cards report when the statement is generated. If you're paying after the statement is generated then a balance reported.

Were your statement balances unusually high recently?
Last edited by takeshi on Wed Oct 18, 2017 9:15 am, edited 10 times in total.

an_asker
Posts: 1862
Joined: Thu Jun 27, 2013 2:15 pm

Re: Credit scores fell this month a lot for no reason

Post by an_asker » Wed Oct 18, 2017 9:04 am

jhfenton wrote:
Wed Oct 18, 2017 7:50 am
MikeG62 wrote:
Wed Oct 18, 2017 7:42 am
There is zero risk in extending me credit.
The scores aren't entirely designed to estimate your risk. They're designed to rate your attractiveness as a credit customer. Your risk level is only half of that picture. :beer
[...]
This bears repeating, especially because folks don't appear to be understanding the purpose of credit scores. The credit scores are only for the lender to see how much money they can make off of you. If you don't owe any money to anyone (or haven't done so for a while), there is no way anyone (or any algorithm) can guess how you would behave when you actually do need to take a loan. If you do have a loan and pay it off in the regular schedule of minimum payments, in fact you are a better prospect for a lender than if you were to turn around and immediately pay it off. I obviously am not intimately familiar with the score algorithm, but I wouldn't be surprised if both these types of consumers had a comparable score - the one who pays off a loan (or credit card) immediately and the one who pays the minimum payment (but never defaults).

PS: This does not address OP's question.

Quickfoot
Posts: 955
Joined: Fri Jan 11, 2013 1:03 pm

Re: Credit scores fell this month a lot for no reason

Post by Quickfoot » Wed Oct 18, 2017 9:14 am

There are a few possibilities, #1 an old credit item that was boosting your score fell off your report and that caused your score to drop (most likely), #2 someone stole your information and opened new accounts causing your score to go down, #3 a negative event occurred such as a missed or late payment. #4 your balances are significantly higher than they were in the past

Grt2bOutdoors
Posts: 17138
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: Credit scores fell this month a lot for no reason

Post by Grt2bOutdoors » Wed Oct 18, 2017 9:33 am

I recently paid off a large installment loan - my credit score declined 30 points :annoyed . The credit agencies need to revise their use of a FICO scoring model that fails to understand how risk declines when overall credit utilization declines. It's annoying, but you can't fix stupid.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

michaeljc70
Posts: 1955
Joined: Thu Oct 15, 2015 3:53 pm

Re: Credit scores fell this month a lot for no reason

Post by michaeljc70 » Wed Oct 18, 2017 11:07 am

It is extremely hard to have a FICO of 840 with no installment loan or mortgage. Are you sure it was that high? When did you last have a loan? Maybe that fell off your report?

an_asker
Posts: 1862
Joined: Thu Jun 27, 2013 2:15 pm

Re: Credit scores fell this month a lot for no reason

Post by an_asker » Wed Oct 18, 2017 11:41 am

Grt2bOutdoors wrote:
Wed Oct 18, 2017 9:33 am
I recently paid off a large installment loan - my credit score declined 30 points :annoyed . The credit agencies need to revise their use of a FICO scoring model that fails to understand how risk declines when overall credit utilization declines. It's annoying, but you can't fix stupid.
I don't think it is as stupid as you make it sound! Let's step back and rethink this - however you slice and dice it, the truth is that the FICO scores are for lenders, not the borrowers. As a lender, you're trying to see who you can better market your services to and who would be profitable to you. You'd want to loan money to someone who a) is stupid (or financially incapable) enough to keep a loan going in perpetuality b) always makes the periodic payment without being late. Such a person will always owe you money and will always keep paying interest to you. Others, such as those who close out loans or those who don't pay on time, aren't going to be as profitable to you and/or will need much more babysitting (the loans, if not the borrower!).

So, given the available candidates, if I were a lender and I were trying to figure out who'd be my best borrower, I would rank them in the following order:

- has all sorts of loans and keeps paying interest ... and is always on time
- has only a few loans and keeps paying interest (but does tend to close out loans on schedule) ... and is always on time
- has only a few loans and keeps paying interest, but makes extra payments to close out loans ahead of schedule ... and is always on time
- has only a few loans and keeps paying interest, but makes extra payments to close out loans ahead of schedule and pays credit cards immediately upon billing ... and is always on time
- has never had a loan (now this might be counter-intuitive, but think about it this way from the lender's standpoint - borrower has always had the money to pay for his/her purchases in cash a la Dave Ramsey, but now a point has come where he/she needs to borrow some money. How can I be sure that the borrower is really going to pay me back? Maybe he/she is needing to borrow money for a need that surpasses his current monetary holdings, else he/she would've have even asked for a loan ...)

As a lender, the following categories might make me more money, but they would also be more hit or miss, and the need to constantly be alert to missing payments would override the extra profit probability!

- similar to the above, but have a few delays in payment and therefore pay extra fees (and need to be babysat)
- similar to the above, but are delinquent more frequently
- similar to the above, but have a few loans that have not been paid in a while

I might have missed a few categories there!

MikeG62
Posts: 507
Joined: Tue Nov 15, 2016 3:20 pm
Location: New Jersey

Re: Credit scores fell this month a lot for no reason

Post by MikeG62 » Wed Oct 18, 2017 12:41 pm

an_asker wrote:
Wed Oct 18, 2017 11:41 am
Grt2bOutdoors wrote:
Wed Oct 18, 2017 9:33 am
I recently paid off a large installment loan - my credit score declined 30 points :annoyed . The credit agencies need to revise their use of a FICO scoring model that fails to understand how risk declines when overall credit utilization declines. It's annoying, but you can't fix stupid.
I don't think it is as stupid as you make it sound! Let's step back and rethink this - however you slice and dice it, the truth is that the FICO scores are for lenders, not the borrowers. As a lender, you're trying to see who you can better market your services to and who would be profitable to you. You'd want to loan money to someone who a) is stupid (or financially incapable) enough to keep a loan going in perpetuality b) always makes the periodic payment without being late. Such a person will always owe you money and will always keep paying interest to you. Others, such as those who close out loans or those who don't pay on time, aren't going to be as profitable to you and/or will need much more babysitting (the loans, if not the borrower!).

So, given the available candidates, if I were a lender and I were trying to figure out who'd be my best borrower, I would rank them in the following order:

- has all sorts of loans and keeps paying interest ... and is always on time
- has only a few loans and keeps paying interest (but does tend to close out loans on schedule) ... and is always on time
- has only a few loans and keeps paying interest, but makes extra payments to close out loans ahead of schedule ... and is always on time
- has only a few loans and keeps paying interest, but makes extra payments to close out loans ahead of schedule and pays credit cards immediately upon billing ... and is always on time
- has never had a loan (now this might be counter-intuitive, but think about it this way from the lender's standpoint - borrower has always had the money to pay for his/her purchases in cash a la Dave Ramsey, but now a point has come where he/she needs to borrow some money. How can I be sure that the borrower is really going to pay me back? Maybe he/she is needing to borrow money for a need that surpasses his current monetary holdings, else he/she would've have even asked for a loan ...)

As a lender, the following categories might make me more money, but they would also be more hit or miss, and the need to constantly be alert to missing payments would override the extra profit probability!

- similar to the above, but have a few delays in payment and therefore pay extra fees (and need to be babysat)
- similar to the above, but are delinquent more frequently
- similar to the above, but have a few loans that have not been paid in a while

I might have missed a few categories there!
I think you are right, despite the fact that I am not in the most desirable category. It may well be that most Boogleheads would not fall in that category either as we as a group tend not to be the type to carry lots of debt or pay any more interest than is absolutely necessary.

Having said this, all it takes is a job loss for the "has all sorts of loans and keeps paying interest ... and is always on time" to become delinquent. However, someone like me who me who retired early and is living off accumulated financial assets does not present this risk. This is where I think their model falls down.

Truth be told, delinquency rates on loans and CC's is much higher than any lender would like for it to be. This would be more evidence that their screening criteria is not doing a good job of identifying higher credit risk consumers. The model tends to be skewed in favor of people who want to carry lots of debt.

Gronnie
Posts: 238
Joined: Sun Oct 19, 2014 2:08 pm

Re: Credit scores fell this month a lot for no reason

Post by Gronnie » Wed Oct 18, 2017 12:47 pm

A few things:

1. 0% utilization is worse than a small amount of utilization for FICO scoring purposes
2. FICO uses "buckets" to determine scores, it's possible you moved into a different bucket
3. Anything over 760 doesn't matter anyway

integrity
Posts: 372
Joined: Fri Mar 12, 2010 12:57 am

Re: Credit scores fell this month a lot for no reason

Post by integrity » Wed Oct 18, 2017 12:52 pm

Gronnie wrote:
Wed Oct 18, 2017 12:47 pm
3. Anything over 760 doesn't matter anyway
Out of curiosity what is the evidence for this?


integrity
Posts: 372
Joined: Fri Mar 12, 2010 12:57 am

Re: Credit scores fell this month a lot for no reason

Post by integrity » Wed Oct 18, 2017 1:01 pm

Well: https://www.frugaltravelguy.com/2014/05 ... s-760.html

I'm not saying frugaltravelguy is a reliable source, I'm just saying that if you Google, you find a wide variety of conflicting information.

This is an honest question. I'd love to have an authoritative source (not a blog) that articulates, say, what the majority of mortgage lenders view as the best possible score range (in terms of what rate they will offer).

Gronnie
Posts: 238
Joined: Sun Oct 19, 2014 2:08 pm

Re: Credit scores fell this month a lot for no reason

Post by Gronnie » Wed Oct 18, 2017 1:05 pm

That blog talks about not stopping when your score hits 760, then goes on to say that you will get the best rates always when >760....

vmsx
Posts: 37
Joined: Wed Jan 07, 2015 6:48 pm

Re: Credit scores fell this month a lot for no reason

Post by vmsx » Wed Oct 18, 2017 1:06 pm

I'm officially at zero utilization because I charge typically less than $500 a month and have $170k in credit limits across 10 credit. It's been like this more or less for a decade, although occasionally I might have a monthly balance of $2000 that I pay off immediately.

To answer other questions, reports show no negatives, no inquiries, no new accounts, etc.
Basically something seems to have changed with the model or it's a monthly blip. Guess I'll know next month.

tomd37 wrote:
Wed Oct 18, 2017 8:37 am
I can see how a zero utilization rate is possible on credit cards. The amount of your monthly bill when issued is what is reported on credit reports. You can arrange to pay that amount on the same day as your bill is issued and you could then have a zero balance and utilization rate. I charge virtually everything to my two credit cards and if I see that I will have a significant balance(over 10% of my credit limit) about to be billed I consider making an advance payment to lower that balance to a respectable amount.

Edit: The Wizard and I were writing at the same time.

Gronnie
Posts: 238
Joined: Sun Oct 19, 2014 2:08 pm

Re: Credit scores fell this month a lot for no reason

Post by Gronnie » Wed Oct 18, 2017 1:08 pm

vmsx wrote:
Wed Oct 18, 2017 1:06 pm
I'm officially at zero utilization because I charge typically less than $500 a month and have $170k in credit limits across 10 credit. It's been like this more or less for a decade, although occasionally I might have a monthly balance of $2000 that I pay off immediately.

To answer other questions, reports show no negatives, no inquiries, no new accounts, etc.
Basically something seems to have changed with the model or it's a monthly blip. Guess I'll know next month.

tomd37 wrote:
Wed Oct 18, 2017 8:37 am
I can see how a zero utilization rate is possible on credit cards. The amount of your monthly bill when issued is what is reported on credit reports. You can arrange to pay that amount on the same day as your bill is issued and you could then have a zero balance and utilization rate. I charge virtually everything to my two credit cards and if I see that I will have a significant balance(over 10% of my credit limit) about to be billed I consider making an advance payment to lower that balance to a respectable amount.

Edit: The Wizard and I were writing at the same time.
You most likely have been moved to a different scoring bucket based on AAoA or some other thing out of your control.

User avatar
flamesabers
Posts: 1463
Joined: Fri Mar 03, 2017 12:05 pm
Location: Rochester, MN

Re: Credit scores fell this month a lot for no reason

Post by flamesabers » Wed Oct 18, 2017 1:13 pm

integrity wrote:
Wed Oct 18, 2017 1:01 pm
This is an honest question. I'd love to have an authoritative source (not a blog) that articulates, say, what the majority of mortgage lenders view as the best possible score range (in terms of what rate they will offer).
I'm doubtful banks would choose to disclose this sort of information to the public as it wouldn't be in their best interest.

In any case, when shopping for the best possible rate I think something to keep in mind is it's not just your credit score that's taken into consideration. Job stability, income, etc. are also factors that may be considered.

michaeljc70
Posts: 1955
Joined: Thu Oct 15, 2015 3:53 pm

Re: Credit scores fell this month a lot for no reason

Post by michaeljc70 » Wed Oct 18, 2017 1:15 pm

Gronnie wrote:
Wed Oct 18, 2017 12:47 pm
A few things:

1. 0% utilization is worse than a small amount of utilization for FICO scoring purposes
2. FICO uses "buckets" to determine scores, it's possible you moved into a different bucket
3. Anything over 760 doesn't matter anyway
760 won't get you the best rates with some auto insurers.

User avatar
flamesabers
Posts: 1463
Joined: Fri Mar 03, 2017 12:05 pm
Location: Rochester, MN

Re: Credit scores fell this month a lot for no reason

Post by flamesabers » Wed Oct 18, 2017 1:17 pm

michaeljc70 wrote:
Wed Oct 18, 2017 1:15 pm
Gronnie wrote:
Wed Oct 18, 2017 12:47 pm
A few things:

1. 0% utilization is worse than a small amount of utilization for FICO scoring purposes
2. FICO uses "buckets" to determine scores, it's possible you moved into a different bucket
3. Anything over 760 doesn't matter anyway
760 won't get you the best rates with some auto insurers.
All the more reason to pay in cash.

Edit: I was thinking of car loans, not car insurance. :oops:
Last edited by flamesabers on Wed Oct 18, 2017 1:38 pm, edited 1 time in total.

michaeljc70
Posts: 1955
Joined: Thu Oct 15, 2015 3:53 pm

Re: Credit scores fell this month a lot for no reason

Post by michaeljc70 » Wed Oct 18, 2017 1:22 pm

flamesabers wrote:
Wed Oct 18, 2017 1:17 pm
michaeljc70 wrote:
Wed Oct 18, 2017 1:15 pm
Gronnie wrote:
Wed Oct 18, 2017 12:47 pm
A few things:

1. 0% utilization is worse than a small amount of utilization for FICO scoring purposes
2. FICO uses "buckets" to determine scores, it's possible you moved into a different bucket
3. Anything over 760 doesn't matter anyway
760 won't get you the best rates with some auto insurers.
All the more reason to pay in cash.
For your auto insurance? It doesn't matter. They still will run your credit score as part of their underwriting if they are one of the major insurers and you are a new customer. I am not sure if they do it for ongoing customers.

User avatar
flamesabers
Posts: 1463
Joined: Fri Mar 03, 2017 12:05 pm
Location: Rochester, MN

Re: Credit scores fell this month a lot for no reason

Post by flamesabers » Wed Oct 18, 2017 1:33 pm

michaeljc70 wrote:
Wed Oct 18, 2017 1:22 pm
flamesabers wrote:
Wed Oct 18, 2017 1:17 pm
michaeljc70 wrote:
Wed Oct 18, 2017 1:15 pm
Gronnie wrote:
Wed Oct 18, 2017 12:47 pm
A few things:

1. 0% utilization is worse than a small amount of utilization for FICO scoring purposes
2. FICO uses "buckets" to determine scores, it's possible you moved into a different bucket
3. Anything over 760 doesn't matter anyway
760 won't get you the best rates with some auto insurers.
All the more reason to pay in cash.
For your auto insurance? It doesn't matter. They still will run your credit score as part of their underwriting if they are one of the major insurers and you are a new customer. I am not sure if they do it for ongoing customers.
If you are getting unreasonable rates with your insurance carrier, shop around for a different carrier that isn't so insistent on you having a near-perfect credit score.
Last edited by flamesabers on Wed Oct 18, 2017 1:38 pm, edited 2 times in total.

2pedals
Posts: 257
Joined: Wed Dec 31, 2014 12:31 pm

Re: Credit scores fell this month a lot for no reason

Post by 2pedals » Wed Oct 18, 2017 1:34 pm

I had a perfect FICO score of 850 for years. After I paid off my home loan early my FICO score dropped to about 760. It has slowly worked it's way back up to 800. I payed off my home loan early, never had a late payment my whole life (now 58 years old), significant savings and my income has gone up significantly. My daughter who is 25 years old graduated from college last year has a credit score of about 780 with little history, much lower salary and almost no net worth.

The ability to determine and scale credit worthiness with a FICO score with excellent credit history is flawed.

User avatar
flamesabers
Posts: 1463
Joined: Fri Mar 03, 2017 12:05 pm
Location: Rochester, MN

Re: Credit scores fell this month a lot for no reason

Post by flamesabers » Wed Oct 18, 2017 1:39 pm

2pedals wrote:
Wed Oct 18, 2017 1:34 pm
I had a perfect FICO score of 850 for years. After I paid off my home loan early my FICO score dropped to about 760. It has slowly worked it's way back up to 800. I payed off my home loan early, never had a late payment my whole life (now 58 years old), significant savings and my income has gone up significantly. My daughter who is 25 years old graduated from college last year has a credit score of about 780 with little history, much lower salary and almost no net worth.

The ability to determine and scale credit worthiness with a FICO score with excellent credit history is flawed.
Did your daughter have any student loans? Salary and net worth aren't a factor for your FICO score.

tesuzuki2002
Posts: 78
Joined: Fri Dec 11, 2015 12:40 pm

Re: Credit scores fell this month a lot for no reason

Post by tesuzuki2002 » Wed Oct 18, 2017 6:46 pm

JBTX wrote:
Tue Oct 17, 2017 11:15 pm
vmsx wrote:
Tue Oct 17, 2017 8:02 pm
I monitor my scores via various credit cards for all 3 bureaus, getting the FICO Score 8 numbers.

My scores are typically 820-840 but this month they all fell into 780s-799. My utilization % is 0, no inquiries, and I made no charges more than $200.
I have a 25+ year history. My only negative repeatedly pointed out now and over the years is lack of installment and mortgage loan history. (Basically, I just have a lot of credit card accounts, that I use and pay off immediately, I rarely go over 1% utilization.)
This is the first time I've ever seen any FICO for me under 800 in well over a decade that I've checked them. (Contrawise: credit karma/sesame Vantage FAKOs are all 830s still, updated today.)

It seems there was a big change in how FICO is calculated.

Anyone else know what might be going on or have a similar result? It's more a curiosity for me as I have no need for credit.
If you use your credit cards, how can you have a utilization of 0%?

You didn't close any accounts, did you?

Also this:

https://www.nerdwallet.com/blog/finance ... -pay-debt/
The second-most-important factor, credit utilization, is the reason your credit may drop a little after you pay off your debt. Having low credit utilization (30% or less) is good; having no credit utilization may be harmful to your score.

On occasion it is good to let credit cards send you a bill... if you pay it off immediately before month end you have 0% utilization and that is perceived as bad.

Billionaire
Posts: 248
Joined: Sat Jan 04, 2014 3:05 pm

Re: Credit scores fell this month a lot for no reason

Post by Billionaire » Wed Oct 18, 2017 7:00 pm

Mine fell too. From about 829 to 804. Still over 800, but I can't help thinking it's due to getting the free credit monitoring from Equifax.

JBTX
Posts: 1522
Joined: Wed Jul 26, 2017 12:46 pm

Re: Credit scores fell this month a lot for no reason

Post by JBTX » Wed Oct 18, 2017 7:16 pm

tesuzuki2002 wrote:
Wed Oct 18, 2017 6:46 pm
JBTX wrote:
Tue Oct 17, 2017 11:15 pm
vmsx wrote:
Tue Oct 17, 2017 8:02 pm
I monitor my scores via various credit cards for all 3 bureaus, getting the FICO Score 8 numbers.

My scores are typically 820-840 but this month they all fell into 780s-799. My utilization % is 0, no inquiries, and I made no charges more than $200.
I have a 25+ year history. My only negative repeatedly pointed out now and over the years is lack of installment and mortgage loan history. (Basically, I just have a lot of credit card accounts, that I use and pay off immediately, I rarely go over 1% utilization.)
This is the first time I've ever seen any FICO for me under 800 in well over a decade that I've checked them. (Contrawise: credit karma/sesame Vantage FAKOs are all 830s still, updated today.)

It seems there was a big change in how FICO is calculated.

Anyone else know what might be going on or have a similar result? It's more a curiosity for me as I have no need for credit.
If you use your credit cards, how can you have a utilization of 0%?

You didn't close any accounts, did you?

Also this:

https://www.nerdwallet.com/blog/finance ... -pay-debt/
The second-most-important factor, credit utilization, is the reason your credit may drop a little after you pay off your debt. Having low credit utilization (30% or less) is good; having no credit utilization may be harmful to your score.

On occasion it is good to let credit cards send you a bill... if you pay it off immediately before month end you have 0% utilization and that is perceived as bad.
I also set them to autopay and pay in full a day or two before the due date. So in my case there is always a balance. I'm not really sure why anybody would want to pay at the end of month.

vmsx
Posts: 37
Joined: Wed Jan 07, 2015 6:48 pm

Re: Credit scores fell this month a lot for no reason

Post by vmsx » Wed Oct 18, 2017 8:15 pm

Billionaire wrote:
Wed Oct 18, 2017 7:00 pm
Mine fell too. From about 829 to 804. Still over 800, but I can't help thinking it's due to getting the free credit monitoring from Equifax.
I didn't get EQ credit monitoring; I have all locked reports for years.

michaeljc70
Posts: 1955
Joined: Thu Oct 15, 2015 3:53 pm

Re: Credit scores fell this month a lot for no reason

Post by michaeljc70 » Thu Oct 19, 2017 9:05 am

JBTX wrote:
Wed Oct 18, 2017 7:16 pm
tesuzuki2002 wrote:
Wed Oct 18, 2017 6:46 pm
JBTX wrote:
Tue Oct 17, 2017 11:15 pm
vmsx wrote:
Tue Oct 17, 2017 8:02 pm
I monitor my scores via various credit cards for all 3 bureaus, getting the FICO Score 8 numbers.

My scores are typically 820-840 but this month they all fell into 780s-799. My utilization % is 0, no inquiries, and I made no charges more than $200.
I have a 25+ year history. My only negative repeatedly pointed out now and over the years is lack of installment and mortgage loan history. (Basically, I just have a lot of credit card accounts, that I use and pay off immediately, I rarely go over 1% utilization.)
This is the first time I've ever seen any FICO for me under 800 in well over a decade that I've checked them. (Contrawise: credit karma/sesame Vantage FAKOs are all 830s still, updated today.)

It seems there was a big change in how FICO is calculated.

Anyone else know what might be going on or have a similar result? It's more a curiosity for me as I have no need for credit.
If you use your credit cards, how can you have a utilization of 0%?

You didn't close any accounts, did you?

Also this:

https://www.nerdwallet.com/blog/finance ... -pay-debt/
The second-most-important factor, credit utilization, is the reason your credit may drop a little after you pay off your debt. Having low credit utilization (30% or less) is good; having no credit utilization may be harmful to your score.

On occasion it is good to let credit cards send you a bill... if you pay it off immediately before month end you have 0% utilization and that is perceived as bad.
I also set them to autopay and pay in full a day or two before the due date. So in my case there is always a balance. I'm not really sure why anybody would want to pay at the end of month.
I have my credit cards all on autopay.

I have heard of others doing this (paying it off after each purchase or multiple times a month) and I don't get it at all. It seems like a hassle and you are giving up the free float that credit cards give you.
Last edited by michaeljc70 on Thu Oct 19, 2017 9:27 am, edited 1 time in total.

JBTX
Posts: 1522
Joined: Wed Jul 26, 2017 12:46 pm

Re: Credit scores fell this month a lot for no reason

Post by JBTX » Thu Oct 19, 2017 9:10 am

michaeljc70 wrote:
Thu Oct 19, 2017 9:05 am
JBTX wrote:
Wed Oct 18, 2017 7:16 pm
tesuzuki2002 wrote:
Wed Oct 18, 2017 6:46 pm
JBTX wrote:
Tue Oct 17, 2017 11:15 pm
vmsx wrote:
Tue Oct 17, 2017 8:02 pm
I monitor my scores via various credit cards for all 3 bureaus, getting the FICO Score 8 numbers.

My scores are typically 820-840 but this month they all fell into 780s-799. My utilization % is 0, no inquiries, and I made no charges more than $200.
I have a 25+ year history. My only negative repeatedly pointed out now and over the years is lack of installment and mortgage loan history. (Basically, I just have a lot of credit card accounts, that I use and pay off immediately, I rarely go over 1% utilization.)
This is the first time I've ever seen any FICO for me under 800 in well over a decade that I've checked them. (Contrawise: credit karma/sesame Vantage FAKOs are all 830s still, updated today.)

It seems there was a big change in how FICO is calculated.

Anyone else know what might be going on or have a similar result? It's more a curiosity for me as I have no need for credit.
If you use your credit cards, how can you have a utilization of 0%?

You didn't close any accounts, did you?

Also this:

https://www.nerdwallet.com/blog/finance ... -pay-debt/
The second-most-important factor, credit utilization, is the reason your credit may drop a little after you pay off your debt. Having low credit utilization (30% or less) is good; having no credit utilization may be harmful to your score.

On occasion it is good to let credit cards send you a bill... if you pay it off immediately before month end you have 0% utilization and that is perceived as bad.
I also set them to autopay and pay in full a day or two before the due date. So in my case there is always a balance. I'm not really sure why anybody would want to pay at the end of month.
I have my credit cards all on autopay.

I have heard of others doing this (paying it off after each purchase or multiple times a month) and I don't get it at all. It seems like an hassle and you are giving up the free float that credit cards give you.
Totally agree. On occasion I may pay early if it is a card I plan to cancel or if the autopay takes a while to get set up, or maybe some store card my wife signed up for to get a discount, but that is the rare exception.

User avatar
grabiner
Advisory Board
Posts: 20857
Joined: Tue Feb 20, 2007 11:58 pm
Location: Columbia, MD

Re: Credit scores fell this month a lot for no reason

Post by grabiner » Fri Oct 20, 2017 10:13 pm

You need to get reason codes from the source of the score; these will tell you the reasons your score is not higher, and the top reason is presumably why the score dropped, particularly if it wasn't the top reason last month.

I encountered your phenomenon once on Credit Karma, with its old Trans Union score. My score took a big drop one month because an old card aged off my report. While it wasn't my oldest card, I went from having balances on three of six accounts to three of five, and apparently this model considered carrying balances on more than half your accounts a major negative. The next month, I had balances on two of five accounts, and my score went back up. If there had been reason codes, I would have had a top reason, "fraction of accounts with balances is too high."
David Grabiner

AlphaLess
Posts: 46
Joined: Fri Sep 29, 2017 11:38 pm

Re: Credit scores fell this month a lot for no reason

Post by AlphaLess » Fri Oct 20, 2017 10:47 pm

vmsx wrote:
Tue Oct 17, 2017 8:02 pm
I monitor my scores via various credit cards for all 3 bureaus, getting the FICO Score 8 numbers.

My scores are typically 820-840 but this month they all fell into 780s-799. My utilization % is 0, no inquiries, and I made no charges more than $200.
I have a 25+ year history. My only negative repeatedly pointed out now and over the years is lack of installment and mortgage loan history. (Basically, I just have a lot of credit card accounts, that I use and pay off immediately, I rarely go over 1% utilization.)
This is the first time I've ever seen any FICO for me under 800 in well over a decade that I've checked them. (Contrawise: credit karma/sesame Vantage FAKOs are all 830s still, updated today.)

It seems there was a big change in how FICO is calculated.

Anyone else know what might be going on or have a similar result? It's more a curiosity for me as I have no need for credit.
How many reporting accounts you have?

In recent FICO models, I have noticed that number of reporting accounts make a big difference.

I probably have close to 40, and my score is much higher these days.

Each reporting account (that is kept current) reports 1 on-time payment per month. Reporting shows for 7 or 10 years: that's 84 or 100 per account. So 40 accounts gives you around 4000 on-time payment. That increases your score a lot.

Sure, diversity of types of accounts matters, but that is an orthogonal issue.

Post Reply