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16 point Experian score drop???


iam
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So I get this email from Experian saying that my score dropped 16 points. Well naturally I'm like WTF and am I being hacked or id theft???... 
Then I start with getting my credit reports from each agency, and there are no new accounts, not new hard pulls, no high or unknown utilizations, no closed accounts, no paid off loans, basically there's nothing that every article I read lists as possible causes, although they all say that I should really find out what's up with any kind of large drop.... 

So is 16 points a large drop?  I thought I was doing the right things by getting my % down, I'm at 8% right now.  I did pay off a card balance last month, but I make sure that I have a small balance on some cards at the end of their billing cycles so usage on the cards get's reported... I mean I believe I am doing all the things I'm suppose to do, so what the F is happening? 

I'm really confused.... 

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16 pts is a significant change, but not a "large" change.

 

In the absence of apparent reasons for a change, one possibility that must be considered is "rebucketing".  This is something that's more likely to happen with a young profile (say, history of 2 years or less).  However, it potentially can happen to anyone.

 

Let me try to explain what's a modestly complex topic as concisely and clearly as possible:

 

Credit scoring is based upon a statistical analysis of past delinquency experience in the population.  The goal is infer a future likelihood of significant account delinquency from certain data points in reported credit history.

 

This is accomplished by looking at past delinquencies in the population and statistically relating those instances to corresponding credit history that provides the strongest correlation between the two (i.e. identifying credit factors that are most likely to be present at the time of (or before) those delinquencies occurred).

 

Presence or absence of those factors are associated with various levels of credit risk (possible future delinquency), with that risk then translated into a credit score.

 

Now, here comes the "rub":  In statistical analysis of this sort, the best results come from breaking the general population into a number of subsets, and then performing the analysis on each subset.  For a credit score analysis, such subsets might be formed by splitting the population according to number of years of credit experience, whether they have an installment loan or mortgage reporting, or any number of other credit variables.

 

The consequence is that two people, having very similar credit experience, might have different credit scores simply because they've been segregated into different subsets (the actual terminology is Scorecards, with a change from one Scorecard to another termed "rebucketing").  FWIW, that credit score difference arises from overall differences in credit factors between subsets, when moving from one subset to another.

 

This takes us back to your score change.  If, for example, the age of your oldest account passed from 1.9 years to 2.0 years, this might result in your inclusion for scoring purposes into another subset (Scorecard), with your 16 pt score change being fairly typical. 

 

For what it's worth, a shift from one Scorecard to another is generally a VERY infrequent event.  Anyone who tends to attribute a number of score changes to "rebucketing" probably is barking up the wrong tree and may be overlooking subtle report changes (such as the removal of an account for obsolescence, i.e. having passed standard reporting time limits).

 

 

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16 hours ago, iam said:

So I get this email from Experian saying that my score dropped 16 points. Well naturally I'm like WTF and am I being hacked or id theft???... 
Then I start with getting my credit reports from each agency, and there are no new accounts, not new hard pulls, no high or unknown utilizations, no closed accounts, no paid off loans, basically there's nothing that every article I read lists as possible causes, although they all say that I should really find out what's up with any kind of large drop.... 

So is 16 points a large drop?  I thought I was doing the right things by getting my % down, I'm at 8% right now.  I did pay off a card balance last month, but I make sure that I have a small balance on some cards at the end of their billing cycles so usage on the cards get's reported... I mean I believe I am doing all the things I'm suppose to do, so what the F is happening? 

I'm really confused.... 

did you drop from over 10% util to under? That could put you in a new consumer segment.

 

FWIW 16 points is largely meaningless. By "small balance" I sure hope you don't mean you are paying interest...

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