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I Have Removed Several Negative Items and My Credit Score Went DOWN! Why?

Last Updated - June 2, 2010

Credit score fluctuation is a topic we get lot of questions about. There have been countless stories of someone working hard to delete negative items off his/her credit history only to find their score went down - not up. Does this mean you should hault your efforts to clean up your credit? No Way! There are a lot of factors which go into calculating your credit score, so don't get discouraged.

So how does this credit scoring program work? FICO was founded in 1956 as Fair Issac Corporation by engineer Bill Fair and mathematician Earl Isaac. They developed the FICO scoring model to measure credit risk. This is a HIGHLY COMPLEX statistical program that uses all kinds of data gathered from many different sources, not just creditors. No wonder the data and the data analysis is so highly complex.

Consumers don't really know or understand everything about the Fair Isaac credit scoring model.

Like any live model, the credit scoring math model is probably updated on a daily basis, as well as is influenced by whatever data (not necessarily yours) is fed to the model on that particular day. Untold millions of dollars are spent each year shaping and molding this model for "accuracy."

The consequences of the constant tweaking of a very complex math model? I've seen credit scores fluctuate by 40-50 points between one day and the next when NOTHING changes on an individual's report.

You have to remember with credit repair, it's the long term effects we're shooting for, not the next day results. It's just like going on a diet - even if you are strictly following your diet, the body naturally fluctuates on a daily basis and from one day to another you may see a gain. But in the long run, if you are following the diet (which includes not just diet, but exercise), you will get results.

So, too, with rebuilding your credit. You need to not just remove derogatory items, but continue to rebuild your credit: open secured cards, paying the credit lines you have on time, learning to budget so you don't pile up debt. By following the long-term strategy, you will see the results you want.

Some quick reasons why your score may go down during your credit repair efforts:

• You've removed an old trade line, that while derogatory, was very old. The credit scoring model likes to see a credit history of at least 60 months on all active trade lines.
• You've removed an account which was showing as open with a zero balance. This may have put your over all credit card limits ratio way over 25% used. Let's say you had 3 cards showing, 2 with 50% of the $1,000 limit used, and one with a credit limit of $5,000 with zero used. This takes you from 14% of your credit limit used to 50% of your credit limit used. Remember, credit scoring rates you favorably if you have less than 25% of your total balance used. Jacking up your available credit balance to 50% may wipe out the benefits of removing old lates.
• Any item showing as disputed could take down your score.
• Removal of any installment loans such as car and mortgages from your credit report. The scoring model likes to see a "balanced" report, with both installment and revolving (credit cards).

Remember, these are potential reasons, and depending on the rest of your credit report may or may not have any effect.