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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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5 hours ago, hegemony said:

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...

And make sure that the small balance only reports on one or two cards, not multiple cards.

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You indicate that it was an email from EXP, but you don't indicate which model of Fair Isaac scoring was involved.  As I recall, some of the monitoring sites, to include those from the bureaus, use Vantage, which would be a score to disregard, no matter whether 3.0 or 4.0. 

 

If it was actually a Fair Isaac score, then the others have nailed some of the issues to look out for.  Utilization looks at the number of cards with a balance and NOT just the overall percentage of credit in use.  Small balance on multiple cards can hurt more than the same total dollar amount on one card.

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  • 1 month later...

Okay, apologies for the late reply/update... Well without more specific reasoning from Experian, as they only gave me the standard list of reasons and nothing new or that would've fit my usage at the time.  Neither of the other two agencies moved my score at all, so I can only guess that it was a rebucketing... 

The real rub for me was that I had been working my scores so I could apply for my first Chase card so it really kind of freaked me out for a little bit. I mean I was thinking that maybe my identity was hacked or something, so I ended up pulling all three reports only to see nothing weird or off tilt, thank the gods.... 

Thanks for the tips folks.... 

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Experian seems to like to "roller coaster" Fico 8 scores. Mine goes up and down 14 points every month like clockwork. At some point during the month I've paid off all my cards and it drops, latter in the month it goes back up.

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On 5/13/2022 at 5:38 PM, hdporter said:

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

 

How does a 16 point drop compare to the average number of points a CC application drops a typical credit score (e.g. 16 points = 2 queries)?

 

 

 

 

 

Edited by Flashman
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3 hours ago, 8ball said:

Experian seems to like to "roller coaster" Fico 8 scores. Mine goes up and down 14 points every month like clockwork. At some point during the month I've paid off all my cards and it drops, latter in the month it goes back up.

1) We still don't even know what model the score was derived from

2) Bureaus do not manipulate scores- they are derived simply from applying a formula to the data in the file at that precise moment in time

3) OP needs to look at paper reports and scrutinize a few months worth of them. 

4) All accounts being zero is a known score depressor.  This is how AZEO came into being. 

5) And, since utilization came up in the thread...I will reurge that it is not simply a case of overall util% but that the scores clearly look at the ratio of cards to cards with a balance.  More balances, however small, and you will take a hit of some amount. 

 

Without knowing the specific model in play, we STILL don't know if OP really even LOST anything and, if they did, whether it is significant in a review of an application. 

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Posted (edited)

Well hell,  what has happened since that drop is gonna really fry some brains then...

So I got concerned about the drop mostly cause I was about to apply for a Chase card. Once I realized my identity wasn't hacked or stolen, and that this drop was more or less normal, I made my application.... 

Well most of what happened with the application is for another thread,  but it took me over a month to get my approval, and it happened almost a week after my second reconsideration call and the day after I made an application for a different Chase card.  They apparently don't really communicate very well with non-costumers...  🙄
As for my score they never really dropped from either the application... Weird Right...???  I mean there was a couple of points, but nothing like the OP.  In fact I'm higher now than I was when this thread first posted, even the Experian is almost back to where it was then.... 

Total WTF???  

But whatever,  now I just gotta hit my sign up bonuses on two cards when I was only expecting one.... 
I guess I won't we too concerned about scoring the maximum points right now, just the sign up $.... 

 :P 

Edited by iam
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1 hour ago, iam said:

Well most of what happened with the application is for another thread,  but it took me over a month to get my approval,

 

When you get a chance, would you please consider posting about your application experience?

 

I ask because I am wondering if, perhaps, the delay you experienced may be indicative of a sudden new wariness card companies feel in the current economic environment when it comes to granting new lines of credit. 

 

(Even so, I cannot think offhand why it would take them an entire month to process an application in 2022.)

 

 

 

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On 6/27/2022 at 7:25 PM, Flashman said:

 

When you get a chance, would you please consider posting about your application experience?

Done, and done.... I just posted it... 

 

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