Credit score dropped 10 points

[Donnyten]

Hello. Been working on my credit thanks to this lovely form.. Was recently at 667, until I got an email that stated credit score had dropped by 10 points. I login to transunion to check my credit score ( as they reported it had dropped) and it has indeed dropped by 10 points.  I have two secured cards a bank of america with a zero balance, and a capital one card with an 87 dollar balance, 200 dollar limit.  Could the credit utilization have something to do with the significant drop in score? it is almost a little depressing but i'm trying not to let it stress me out.

[LaneBlane]

Your credit-to-debt ratio is something that can really cause your credit score to rise and fall.

If your Capital One card has a $200 limit, and your balance is $87, you're using slightly more than 43% on this card.  This should be offset by the zero balances on your other cards. 

I do my best to keep my credit-to-debt ratio at 30% or less.  Sometimes I go over if I need to put a large purchase on a card and pay it over time.  When I pay things down, my score goes right back up.

Have there been any other changes on your credit reports such as hard inquiries or new accounts?  Do you know your total credit-to-debt ratio?

 

 

[Harry Seaward]

First, at 667, 10 points is nothing. Second, scores you get from transunion are essentially meaningless. I had credit karma tell me my score dropped several points, yet my true FICO score actually went up. Third, don't worry about your score until you are thinking about applying for new credit. At that point, you want to have all of your revolving balances reporting around 10%. You can use as much of the limit as you want during the cycle. Just be sure it's paid down when the creditor reports to the CRAs. Credit karma is great for finding out reporting dates. 

[Donnyten]

thanks for the responses.   if i pay all of my balance off before the due date instead of the minimum, would my score increase by a few extra points instead of the usual 4 points per month?

[BackFromTheDebt]

4 hours ago, Donnyten said:

thanks for the responses.   if i pay all of my balance off before the due date instead of the minimum, would my score increase by a few extra points instead of the usual 4 points per month?

Probably.

But if you pay it off even SOONER, it does more.

For example, I have a card where the close date is the 15th of each month, and the due date is the 10th of the next month.

They look at utilization.  If you pay the minimum, your utilization for that card will be pretty high.

If you pay the entire thing when it is due ( ALWAYS a good idea when you can afford to do so), usually your utilization is lower.

Suppose you pay it the day before they close.  In my example, it would be paying it off on the 14th when the close date for the month is the 15th.  In that case, the amount you paid does NOT count as part of your utilization.  If you paid off everything, your utilization for that card would be about 0%.

I'm not saying this is what you are in a position to do, but these are some of the tricks people use when they are trying to get their credit score up quickly, for example applying for a mortgage.  SOME utilization showing up is good, but generally the lower the better.  

[Donnyten]

thank you, i appreciate it. 

 

So, an update..   i paid off the entire balance and to my surprise, my score jumped significantly from 657 to 672 according to transunion.  But i also received an email from experian stating my fico score is at 715?   Which one is more accurate? My capitol one limit was also increased from 200 bucks to 500 bucks

 

 

Also, this made me think a little..  would a quick way to improve  credit score , would be to use up a little less than half your limit ( such as what happened last time) , have the bank report to the bureau, score drops..  then pay off entire balance before due date?  will this always work?

[Harry Seaward]

FICO scores are always the "true" score.  These are what your lender uses when they pull your credit.  There is a complication, even within FICO in that there are about 10 different versions of FICO scores depending on the type of credit being applied for.  https://www.myfico.com/credit-education/credit-score-versions/

The FICO score you see through 3rd party services like Experian and Discover Card are usualy FICO 8.  Although Navy Federal reports FICO 9.  If the score you're looking at doesn't claim to be a FICO score, assume it's not and that it's meaningless.  Discover gives your FICO score free to non-account holders.  I don't know if they update it monthly like they do for account holders, but it's your true FICO 8 based on your Transuion credit report.

1 hour ago, Donnyten said:

Also, this made me think a little..  would a quick way to improve  credit score , would be to use up a little less than half your limit ( such as what happened last time) , have the bank report to the bureau, score drops..  then pay off entire balance before due date?  will this always work?

FICO doesn't score your balance history.  Your score is based only on your current snapshot of your credit report.  You could carry 100% of your credit limits for 2 years and then pay everything down to 10% in one month, and your FICO will jump 100 points (example) because it's only looking at the current 10% and no longer 'sees' the prior 100%.  Having said that, FICO apparently maintains data about your prior balances that it can report to potential lenders, so even though you have a 700 FICO now, your potential lender will also have access to the fact that you carried high balances in the past.  Your lender may or may not obtain this info (there's probably an extra fee to get it), and the lender may or may not use the info in deciding to grant credit.

Bottom line is find out when your various creditors report to the bureaus (like I said, CreditKarma is free and great for finding this data) and then make sure your balances are around 10% a day or two before the date they usually report.  This will give you excellent monthly payment history data with FICO and guarantee your 'snapshot' data is the best it can be.

[Spacecadet50]

Don't mean to high jack thread. Was going to post, but saw this one (no need for posts addressing same subject). I paid off an installment loan that updated and my score went down! Reading comments here. One report went down 7, another 13 and still waiting for the other one.  Frustrated....

[Harry Seaward]

@Spacecadet50 Installment loans are not calculated in utilization so paying them off won't raise your score. 

I'm guessing the drop is due to the fact that FICO looks at your "mix" of accounts. If you don't enough other open installment loans you may be getting dinged because you are no longer fulfilling their 'quota'.

[Spacecadet50]

*Crying* Is there anything I can do? The other one followed and the score dropped 8 points.

[Harry Seaward]

The fastest FICO score boost comes from 1.) paying your credit cards down to about 5-10% of your limits, or 2.) getting derogatory info removed.  Other than that, it's just a matter of time while things age.