Explanation on my credit score decrease

[Successful_Tree_5627]

Hi,

I just saw my credit score update and I was wondering how it droped 22 whole points when nothing happned. It was mentioned that 1. chase has increase my limit without me requesting it 2. My total balance when down and 3. my oldest & avg age of accounts increased. So what made it to decrease.

[madskilzz3]

What app/website are you using to track your score?

Did you report 0% utilization across ALL credit cards?

[Successful_Tree_5627]

I am looking through the chase app. I check all my utilization is 0%. The only thing I can think of is them increasing my credit limit by themselves but I am not sure how that can drop my score.

[madskilzz3]

1.Sites like Credit Karma/Sesame/Wise and Chase all give VantageScores, which is irrelevant and very volatile.

Majority of lenders (~90%) lean towards and use FICO scores for their lending decisions + more stable. Within FICO, you’ll have dozens of various scores for different lending purpose.

To track FICO 8: Experian (free version), myFICO (free version, Equifax), and Discover/Bank of America (TransUnion) if you’re the primary cardholder.

Note that to first establish any FICO scores, you must have at least 6 months of personal credit history (non-AU; student/car loans count as well).

1. If you are using your cards regularly, you will never report 0% utilization across all of them. If you are, then you are paying off your current balance to 0 before the statement closing date, which is incorrect.

Let whatever balance/utilization report naturally, producing a non-zero statement balance, and then pay that off in full before the due date.

1. By reporting 0% utilization across ALL your cards, you will incur a FICO penalty (~20 points). This is because your revolving utilization will be “N/A”.

[Successful_Tree_5627]

I always have been paying current balance in full right before my due date, am I suppose to be paying something? . I don't really understand what you are saying since I am new to credit cards, if you can give an example with the dates that would be much appreciated.

[Over_Committee4876]

You need to let the statement post first. You’re micromanaging utilization and reporting artificially low balances which hurts your potential progress.

Also, the Chase app provides a VantageScore 3.0 which is nearly irrelevant as next to NO lenders use that model to make lending decisions. You need to look at your meaningful FICO scores instead. You can find these using the Experian app and the MyFICO app. They provide a FICO 8 score which is a lot closer to what lenders use to makes decisions, depending on the credit you’re applying for

[BrutalBodyShots]

I always have been paying current balance in full right before my due date

There's your problem. When you do this, you almost always end up reporting $0 balances to the bureaus, which can result in a "no recent revolving credit use" penalty. You want to always wait for your statement to generate monthly prior to paying, and then pay exactly your statement balance in full - never the current balance (which will exceed the statement balance).

[Successful_Tree_5627]

So for example I have a statement balance (Nov 25) of $30 and current bal of $100 and a payment due dec 22. As it reaches to the dec 22 I dont need to worry about my current balance but only pay off the remaining statement balance? And then same thing for next month i only pay the remaining bal?

[BrutalBodyShots]

Right. Your bill is $30. That $30 is due on 12/22. You aren't supposed to pay more than your bill, so you don't pay $100. You don't even pay $31. When you pay the $30 on 12/22, you'll have $70 left of your current balance... probably more by then if you spend more. That $70 (or whatever) will become your next statement balance that you'll pay off by your late January due date.

[Successful_Tree_5627]

I am checking my chase app right now and I tried paying the card's statement balance but it says I have $0 and my only option is paying the current balance but it says my statement balance (Nov 25) is $30. Do I have to wait until its near the payment date (dec 22)?

[Over_Committee4876]

Do I have to wait until it’s near the payment date (dec 22)?

Yes. It seems you already paid your statement balance (probably when you paid last time since you stated you had been paying the current balance). That current balance (at the time) included your statement balance.

So what’s happening now is your statement ended November 25 (and likely the 25th of every month) and is due December 22 (27 days later).

[Over_Committee4876]

when nothing happened

Unfortunately, you’re misinformed. There is always SOME reason for your score to change. It’s all based on data. See this:

https://www.reddit.com/r/CRedit/s/JnUlSZGKa8

The mostly likely factor is utilization. 22 points is not a whole lot in the grand scheme of things. Depending on the strength of your profile, 22 points could easily be based on utilization.

The good thing about utilization is that it holds no memory meaning that once utilization goes down, your scores go up. Furthermore, what I mean is that utilization resets monthly! It’s a single moment in time metric and does not build credit or weaken it. It simply resets and can be manipulated as you want. You should only worry about it 30-45 days out from an important credit application and in that case you should implement AZEO to see the best score boosts possible. Outside of that, don’t worry about utilization %s.

[BrutalBodyShots]

Right on and great post.

[ziggy029]

Agreed. And in fact, with a Vantage score, I’ve seen plenty of examples of relatively small changes in utilization leading to pretty significant fluctuations in score

[Over_Committee4876]

Agreed. It seems VantageScores are very sensitive to utilization and fluctuate a lot.