credit scoring/ point adjustments.

[Lema]

HI guys  happy thanksgiving. I was wondering if anyone in the community could shed some light on this for me please. So my credit is fairly new next month i am about to hit the 2yr mark. All accounts are current, no missed payments. Also  i have been making double payments on a auto loan i have for the past few months as well. Recently i had received an alert through the myfico app that my score had decreased 20points!!! which in turn dropped my credit rating. Does anyone know why more or less why that would happen given that i never missed payments or exceed 10% of my credit utilization nor do i carry balances. Thank you all 

[hdporter]

In explaining FICO score changes, a large degree of speculation is always involved.  There are a large number of factors at play, and a modest change can have an unanticipated impact on your score at a time when it seems nothing material has changed.

 

In your case, I'd suspect that FICO dating of your accounts has you crossing the 2 year threshold earlier than anticipated.  FICO scoring is based upon statistical regression analysis in which the overall population being scored is broken into subsets (also referred to as "buckets") of individuals sharing some common characteristics (such as similar credit age, most severe delinquency, etc) to more precisely evaluate trending within each given subset (this allocation of the population into scoring groups is referred to as statistical "segregation").

 

When one shifts between subsets, where (for example) they formerly had one of the longest credit histories within their former subset, but now have one of the shortest among members of their new subset, it's not uncommon for a score to be impacted (typically negatively), even though there's been no underlying credit data change.

 

This can be frustrating to experience when one is on the long trek of credit improvement.  But the shift tends to be temporary.   As you move into the "mainstream" of your new segment, your score should normalize and return to where it was, and continue to improve from there.

 

 

 

 

[Lema]

thank you for your feedback very much appreciated.

[shifter]

Porter is talking about rebucketing. While that's real and certainly possible, you will want to make sure something else didn't change. 

[StarkRaven$]

Have you ever let one account carry just a $2 - $5 balance to report and then stop doing that and paid all credit cards in full? I did that once when I was new to credit and had a thin file and my ficos went down. I remember calling Experian and they said if all revolvers show zero balance it is calculated in their system as if I hadn't used the credit (even though I did) and my fico score would go down.

 

As advised, you need to get your reports to check how things are reporting over time and determine if anything has changed.