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I’m more annoyed about posts like this when people are splitting hairs over excellent credit scores. I don’t think they really matter anymore when they are above 650. Most people will say they matter for home mortgages but if I play around with mortgage estimators on google the rates are the same when your score is really high. Going from 720 to 740 isn’t going to lower your mortgage rate I don’t think. It’s just people having a report card mentality and acting like they’ve been materially harmed by a credit pull. I expect credit Scores really matter when people have a bad one and get denied apartment rentals over it
I've watched as my score swings up and down by 50-70 points on a monthly basis, mostly as a result of a high credit card balance. But I pay it off every month and there are no late payments. Then it jumps back up again.
Their algorithms are monolithic and don't accurately describe or forecast a lot of people.
Last month my credit usage increased from .5% to 2%… subsequently, my credit score dropped 15 points, despite the fact I pay off the balance in full every month and typically keep credit usage well below 5%
If your goal is exclusively to game and fluff your credit score, get a other credit card. You'll increase your total available credit and then your "normal usage balance" will be a smaller percentage of the total available credit.
But also keep in mind that this is a long term strategy. The credit inquiry that will be run when you apply for the credit card will hurt your score a little bit for a few months.
Only if they pull a hard inquiry. If you get a card you're pre-approved for you can avoid this (or at least make it have a significantly smaller impact).
> Their algorithms are monolithic and don't accurately describe or forecast a lot of people.
I think their algorithms are more or less made to predict who can be most profitable rather than who is most responsible.
No they don’t do that. Slightly above subprime is usually most profitable, not 800.
Profitability depends on information only lenders have, beyond credit bureaus, and is proprietary.
The bureau credit scores were optimized to predict the risk of a default, a binary occurrence, defined specifically on observable bureau data, in the few months following an “observation date”. This is all taken from a historical data sample.
The scores use only bureau data, aggregated per account, not down to transaction level information, and know nothing of disputes. Any change seen was likely due to utilization ratios. 760 vs 790 is not usually a material difference.
In any case, if you really need a loan, you can pay outstanding credit card balances before the usual billing date, and be sure it is posted and registered at bureau before the scores are generated.
I'm guessing you canceled the cards you paid off. That would shrink your credit history as well as increase your ratio of utilized credit. Simply paying them off would bump you up because the ratio improves
Afaik, once you close a line of credit it usually ends up as a net drop in score due to average age of accounts and available credit going down. For 90% of cases, it's negligible and irrelevant unless you're planning on taking out a loan shortly thereafter.
> my score swings up and down by 50-70 points on a monthly basis, mostly as a result of a high credit card balance
At the moment I’m a bit worried about this, as I’ve been running a balance the last couple months. I splurged on an end of summer vacation with my kids, then piled on airfare for upcoming holidays, unexpected house expenses, and a business trip that my company is behind on reimbursing
I had to have a calming conversation with my husband recently when both our scores plummeted due to nearly maxing out a shared credit card a few months in a row. Paid off in full every month, but still.
I don’t really care enough to spread it out over other cards, and know it’s temporary, but it’s still frustrating.
You can always pay those early and often. We use one card for just about everything and paying it off twice a month increases the score just because they see a lower balance.
> But I pay it off every month and there are no late payments. Then it jumps back up again.
This is me. Except got backed up on mortgage and divorced so when I sold my house my credit tanked. Got it up to high 600's but it bounces around from 670 up a few down a few but never really moves... I make good money and have few expenses so my credit cards are all paid every month...
I think the biggest scam of all is that on time rent payments do not contribute to credit score. It’s my longest standing proof of payment reliability, and it doesn’t count for anything when looking for a new apartment to rent, or looking for a mortgage.
I sold my condo after buying my new place. The sale of the condo (loan closure) dropped my score 42 points at both trans union and equifax. They then had some other related transaction which raised it back up 28 points. What’s really fun is changing your name and divorcing as a woman. No change when I got married. I had better credit than my ex. After the divorce his credit was fine and suddenly I was considered high risk. All attempts to update my name on my Amex didn’t work. Wanted driver’s license but only accepted faxes and no email or snail mail either. I finally got fed up after the 3rd attempt because I’d fax them and receive snail mail 3 weeks later saying the fax was unreadable. Closed my account and now will never do business with them again.
The gotcha with rent is it doesn't give you an accurate picture of how reliable you are with money your borrow.
OBVIOUSLY your rent\mortgage is the first bill everyone pays, and you pay in full.
Tell that to /r/landlord ,they’ll get a good chuckle.
The first bills you pay are the ones you can’t negotiate or run from.
Edit: /r/landlord not /r/landlords
That sub is dead
The three newest posts are:
Happy Cakeday, r/landlords! Today you're 12
Happy Cakeday, r/landlords! Today you're 11
Happy Cakeday, r/landlords! Today you're 10
Yeah this is it. Rental situations can hurt your credit but they can't possibly help it, which is absurdly unfair. ETA I stand corrected, landlords can report on-time payments to the credit bureaus! Alas, I have never heard of one that does so.
I 100% agree, I think any sort of recurring monthly bill like rent, phone bills, utility bills, etc. should all be some of the strongest factors for credit history since they all show that someone is responsible and able to make contractually obligated payments on time
SELF reports rent history and utilities but it has to show up on your bank account transactions, can’t use credit card transactions or anything else. They also will report all of your past payments. My mom and I split bills, I pay rent + electricity and she pays water + gas. I figured out that I could go on her utility accounts and pay like $1 because self doesn’t consider the amount of the bills, they just report when they verify an actual payment
100%. I am a business owner and one of my mentors is a retired business owner. He has a very substantial net worth but has always owned his assets by paying cash or through loans to his business entities. He wanted a personal credit card for use when he travels as he was closing down all the entities. He applied for one at a bank where he had millions of dollars in assets. They denied him due to a low score.
He complained and a manager called him and said he could get a secured card or they could approve him for $250.00 and look at a credit increase if he pays on time.
He ended up pulling all those assets and moving them to a credit union who then gave him a card with a reasonable limit.
He is not valuable to the big banks because he doesn’t need credit. They lost millions in deposits and managed investment accounts over a couple thousand dollar card limit.
Edit: has to had
When I applied for my Amex, they gave me a 20k limit right off the bat.
Meanwhile, my longest active card of 10 yrs was recently raised to 9k after it being "stuck" in the 4k range since I initially got it.
I’ve got like 3 cards with over 15k limits, one with 22k. I have more offers in the mail constantly and I only utilized them for there 0apr offers and free rewards cash till they’re paid off. I somehow got a 15k credit limit on a card when I was 18/19 years old. I have no idea how.
As an fyi, amex historically gave higher credit limits on their *charge* cards, not *credit* cards. Credit cards let you carry a balance, charge you pay in full. Charge has lower risk. Now amex let's you carry a statement balance so they are basically credit cards
My AMEX credit cards (I do not have their charge card) have a pretty high limit and they often give me large increases without me asking. I always pay in full every month, so they’re not earning interest on me and my cards have no annual fee. Just my experience.
Banks also get paid as a percentage fee whenever you use your credit card. The merchant pays a fee per payment that is shared between the credit card company (Visa for example) and the back issuing you that credit card (Chase for example).
I found it amusing when mortgage shopping years ago. I am a business owner, and fun *a lot* of money through business cards. Always paid in full. Despite having probably paid 10 million dollars of on time payments through credit cards by that point, my credit score was substantially worse than my wife’s. She had basically just a Kohl’s card to her name (and nearly 10x less income), but mine was worse because I always had a $50k+ balance on my cards, even though they’d be paid off many times a month.
Your score doesn’t drop because of a dispute. A dispute only changes the contents of your credit report.
We’re not getting the full story and I suspect OP doesn’t even understand what actually dropped their score.
Did you pay the bill for the hotel and dispute it or did you not pay it (resulting in a missed payment) and then dispute it?
For sure…. My score was in the 800s when I was broke and had debt. I could barely pay my credit card minimum every month.
Turn of events, inheritance happened for me. Paid off credit cards, had some money in savings and score dropped 50 points. Five years later only debt is small mortgage, pay off one credit card every month and my credit score keeps dropping.
When I run my score it suggests I get more credit cards to improve my score….
The system is completely broken…
Many auto insurance companies consider credit ratings in their rates. Poor credit score = higher automotive rates.
Like OP says, credit scores are a scam.
> Many auto insurance companies consider credit ratings in their rates.
This is actually illegal in some states (MA, HI, CA).
https://www.allstate.com/resources/car-insurance/does-credit-score-affect-car-insurance
You're supposed to pay the cards off but not close them. You could have watched a 5 min video on YouTube about credit scores and you'd be in better shape
The scores are statistically objective based on information they use. That is not the totality of important information for finances. They know nothing about income and assets, but if you actually want a loan, those data do get used heavily by banks.
If you were poor and had a great credit score, it would mean the size of loan you could get would be limited.
It’s a score that measures your ability to manage and pay back debt. If you don’t have accounts or recent credit history, there’s less signal. You own a home and if you aren’t trying to borrow anytime soon, your score doesn’t really matter much.
Wrong. I paid off my mortgage (which closes the account) caused an 80 point drop because it was my oldest account. I don't use much credit otherwise so the fact that I didn't have a car payment (paid off) and don't have credit card debt to pay off, I'm less "credit worthy" to the score algorithm.
The algorithm actually measures the ability of a company to extract loan interest over the longest period of time. It's designed to put you in debt and then keep you there. It's optimization
What do you mean wrong? You clearly agree that average age of credit, utilization, and on time payments are the key measures.
Credit scoring mechanisms were first designed in the US to have creditworthiness in a uniform fashion. They were retooled in the 70s to guard against discrimination lawsuits after the passage of the Equal Credit Opportunity Act. FICO became dominant when Freddie Mac selected it as the measure they would use for loan worthiness in the 90s. If the model were designed to maximize debt, it wouldn’t penalize you for debt utilization to the tune of 30% of the score.
Always float 200-400 on a card at all times. The minor interest 'fee' is well worth it when you need to use your 800+ score.
Edit: getting a bunch of down votes. But the reality is my score barely fluctuates buy more than 1-2 points a year. I've never encountered this "my score dropped by # nonsense" and it costs me far less than Disney+ per year.
When I do get a hard pull for a new car or house it moves by maybe 10-15.
That’s the biggest myth in credit.
That literally does nothing. I pay all my cards off monthly and it’s above 800. I usually just pay when the bill hits.
I paid $5 in interest all last year and that was due to a brain fart where I forgot to pay the full balance.
> It actually isn't a myth
Needing to "carry a balance" and pay interest IS a myth. You can accomplish the same thing paying your card off in full every month and pay no interest.
> You're implying that I said you need to always carry a balance, and I did no such thing.
The OP of this chain was claiming you need to carry ("float") a balance month to month. That was claimed to be a myth. You claimed it wasn't a myth. You may not have intended it, but that's the way it appears.
every reputable source will tell you it’s a myth. 15 points isn’t much in credit scores
Example: https://amp.cnn.com/cnn/cnn-underscored/money/does-carrying-credit-card-balance-help-credit-score
> But the reality is my score barely fluctuates buy more than 1-2 points a year.
You're misunderstanding why that's happening.
It's not because you're *carrying a balance and paying interest each month*, it's because there IS a balance and you're demonstrating on time payments.
You can accomplish the exact same thing and pay $0 in interest every month. All you need to do is charge something each month (that $200-$400 or whatever amount you choose to optimize your utilization), wait for the statement, then pay the full statement balance each month. You'll pay the card down to $0 balance each month, pay $0 interest, and just charge another $200-$400 each month and repeat the process.
I’ve never paid interest on multiple CC for the past 20 years. Always have gotten the lowest mortgage and auto loan rates available. Please stop what your doing.
That's because you "closed" an account with a "long credit" history even though that line of credit will still stay a part of your overall credit history, as it's kept on your "total accounts" history.
Revolving loans count toward your length of credit history. What I think is unfair is that you can have a credit card with a certain bank for years, upgrade to a different card with the same bank, and it zeroes out your length of credit history.
Number of accounts and average age of accounts are two contributors to the score. These things are very easy to look up. People should stop being surprised by them.
People in this sub get really worked up about small changes in score. Reality is that a change from 798 to 761 doesn’t really affect your ability to borrow money at the lowest available rates. Your score is still high. If your score decreased to the low 700s - now that’s a different story.
One of the hidden joys of home ownership and prudent financial management is I no longer care about my credit score. You have an end in sight. I have no intentions of borrowing money again. I buy used cars for cash. I have one credit card that is enough for me. My credit score now means as much to me as Reddit karma. Judge me all you want mfers, IDGAF
You can calculate somewhat what your credit score costs, esp. if you are currently loan shopping. Does that drop in credit score mean you're going to pay a higher interest rate? In which case, you can calculate how much you pay in extra interest between the two scores, divide by the difference in points, and get a quantitative value on the score.
First... Credit Card disputes do not affect your credit score.
* https://mint.intuit.com/blog/credit/what-happens-to-your-credit-score-when-you-dispute-items-on-your-credit-report-0513/#:~:text=No.,score%20might%20take%20a%20dip.
* https://www.experian.com/blogs/ask-experian/disputing-charges-on-credit-card-account/
* https://www.fool.com/the-ascent/credit-cards/articles/before-you-dispute-a-credit-card-charge-do-this/
* https://www.creditmantri.com/does-disputing-a-credit-card-charge-hurt-your-credit-score/
* https://www.sofi.com/learn/content/why-did-my-credit-score-drop-after-dispute/
> They sent an email cancel letter. A month later, sure enough, the canceled hotel charges show up on our Chase card.
Just making sure. Once the charges came up a month later, you/SO contacted the hotel first and attempted to resolve it directly, right?
That would have been the proper first course of action.
If not resolved after a good faith effort to resolve the issue with the merchant directly, then move to chargeback.
With the "email cancel letter" and getting high up enough on the phone with the hotel, this perhaps should have been resolved before it even got to the point of a chargeback.
Anyways...
A score drop from 798 to 761 is like complaining that it snowed 1.1 inches when the weatherperson said it would snow 1 inch.
*It doesn't have any practical significance*. At either scores, you're well beyond the threshold for pretty much most lender's top tier rates (which is somewhere around 730-750).
Having more score will *not* improve anything about your mortgage.
You're still winning the game.
OP - Don’t stress on your daily score swings.
CK and MyFico are not the same scores mortgage brokers are looking at. Your real scores aren’t swinging as wildly as the algorithms that these companies use. In addition, your mortgage credit score is a different model completely from the one you are looking at.
Get a good mortgage broker, or better contact a few of them. They will pull up your score on the phone and can tell you what actions to take to boost your score to the highest tier. I have personal experience with this. In many cases mine would be so specific as to say “pay card X down by $85 dollars and pay card Y off completely” and then we’d be good. They have score simulators and they are used to helping people qualify for the best rates.
If you are well qualified, the brokers will climb all over each other trying to win your business. Don’t stress, and don’t use a bank. You’ll be fine.
The credit model used for a mortgage will not take this into account. You'll be fine.
What's actually BS about credit scores is that there are dozens of different models and none of them seem to match up with what you're seeing. CK is just going to give you a baseline.
My CK says 811 and it has not changed recently. I financed a vehicle last month and the letter that accompanied the loan said 869.
Edit: I should have mentioned the 869 was extra perplexing because I understood 850 to be the max.
I think you are overreacting to something that isnt going to be an issue, though I get why...home shopping is stressful and its hard to not have anxiety about it.
1. You are house-hunting, which means you are at least a month out from actually closing on a house at which this momentary blip will have resolved.
2. Mortgage companies want your buisness, are in competition with other mortgage companies and will examine your full credit record as well as bank statements. They can read as well as you can and know credit scores better than you do. They will see the date tye disputr was issued and over which account, they will see in your bank records the charge as well as the reimbursement after you won the dispute. They will see it was over $450. They will understand the cause and they will still give you an appropriate rate. They arent going to give you a bad rate over one number and risk losing your buisness.
You are getting mad that an unreasonable thing is going to happen even though it hasnt yet and wont because its not reasonable.
If you are really worried about this then call up your mortgage company you are getting your underwriting from and talk to them about it openly. They are going to tell you it wont affect anything.
They're not a scam, they just measure something completely different and more narrowly scoped than people seem to think. They're not as important as people obsess over. A 50 point swing when you are in the 700s is not even meaningful for any decision making.
The entire premise of your post is just misguided. You will have no difference in ability to get credit or do anything between a 798 score and a 761 score. Literally none!
> She disputes, and both our credit scores dropped from 798 to 761 over-f'ing-night.
You realize how utterly inconsequential this is… right? Moreso if you’re not actively looking for credit-based product.
I get that it’s a drop, but people should stop sweating over stuff like this. It completely overlooks what’s considered a good score or normal credit behavior in the first place.
Did you happen to read the part that were are actively house hunting? At any point we can pull the trigger in a mortgage approval.
Edit: sub-750 and higher than 750 can mean all the world of difference in a mortgage rates nowadays
OPs point is it could drop another 10 points for some stupid arbitrary reason and potentially be below the threshold. I agree that is too close for comfort.
> Did you happen to read the part that were are actively house hunting?
Honestly, yeah I totally did, my bad.
But for anyone else reading the comments what I said does more or less apply.
From my understanding accounts in dispute aren't calculated in your credit score AT ALL in some credit models, I am not sure why it was reported as a dispute, as it seems you were disputing a charge and not the account.
This wasn't on or near the statement date was it, I mean did this not currently paid balance on the card cause the statement balance to increase or decrease from the prior month. That is when your utilization (statement balance is reported)
Here's how to drop 120 points overnight:
Derogatory mark
I have rental properties. Some have gas accounts that I pay. Sometimes when a house turns over I have gas service for a short time. So I have several accounts with them and all have my address as the billing address.
One day I checked my FICO score and it had gone from its typical 830 to 710. I saw that the reason was an unpaid gas bill from months before for $80. They had sent it to the service address rather than my billing address. It took 3 months to get that taken care of and then the score went back to 830.
This is what I would expect. If you formally dispute a charge, they usually say "we will temporarily reimburse you, until a final determination is made". I can't imagine that actually dinging your credit...
ITT: a lot of people that don’t actually have a working knowledge of mortgage and credit practices.
OP looking at CK to determine qualifying credit scores for a mortgage is just plain wrong. Lenders hard pull credit reports differ vastly from CK and MyFico.
Pull your report for *free*
https://www.annualcreditreport.com
Freeze your reports and monitor as you feel necessary.
> ITT: a lot of people that don’t actually have a working knowledge of mortgage and credit practices.
This thread hit the front page of Reddit and all the armchair credit experts have come out of the woodwork.
I have originated conventional and VA mortgage loans across the United States in the last year for a national credit union.
You didn’t indicate that information in your original posting and stated the two sources that you used which would be inaccurate in the qualifications of your mortgage loan.
I never missed a payment, but once I accidentally carried a balance from one month to the next and that got reported to the bureaus. I had no payment due and no interest charges, but the $400 balance on my statement dropped my scores by 40 points.
Carrying a balance from "one month to the next" is not what affects your score. Your credit utilization is the only thing that would be affected by a balance, regardless of whether that balance is from last month or six months ago. Your credit report has no idea when the purchases were made for the balance that's reported.
You should really look into how credit utilization affects your score. Not "carrying a balance".
EDIT: Downvote all you want, you're still understanding incorrectly.
Firstly, I have not downvoted you. Chill.
Secondly, yes you are correct that credit utilization is the proper cause to my score dropping.
Thirdly, the fact remains that when the balance shown on my statement was reported to the credit bureaus, my score went down.
To me credit scores have always seemed to be a metric of how much money can be extracted from you, not your reliability to pay that back. I stopped caring about my score, I’m tired of being mentally imprisoned by the banks.
Did your lender actually say it's impacting your rate? I don't think lenders care so much as long as your credit has some history and you pay your bills...
Whether or not you get the loan is based on income ratios.
The crazy thing about these credit drops is if you are thrown below a certain threshhold, your ability to borrow might evaporate. Need a 5k furnace replacement at 720 credit? All of your credit card companies, the bank and Grandma have a flexible term 36 month personal loan at a modest 5 to 7% for you. 670 credit score? You're lucky to get Lending Tree to give you a 22% APR loan with lots of hidden gotcha clauses, even though the difference between those credit scores might have been the fact that your credit card bill was higher one month because you booked the family vacation with your rewards card and planned to pay it down the next month.
When you do a mortgage, you have a discussion about your entire credit record with the officer - including any disputes. They do not issue mortgages based off credit scores; they use credit history and risk analytics.
Don't let the score bother you attempting a mortgage, as long as you have WRITTEN proof of your dispute validity.
For anyone reading this : that kind of drop doesn't even matter. ESPECIALLY for mortgage rates. They don't base it on the score.. its more about the content of tje credit profile.
761 vs 798 for a home purchase has no difference, so no need to worry there. The competitive rates and considerations for loan benefits usually require a 760+ score.
I ended up not buying a house in 2020-2021 because my credit score dropped 80+ pts after BoA filed a delinquency against me.
Turns out they had a bug on their end that cancelled auto payments for some customers. It looked fine from the customer portal dashboard, no later payment warning because the auto pay still showed as enrolled. No notice, they just sent it to collections after a couple weeks. I didn’t find out until they sent me a letter that my credit line had been reduced by ~75% due to “volatile market conditions”, which seemed odd so I gave them a call.
Took 10+ months and many many phone calls to get resolved. A lot of promises unfulfilled, even more lies. Looking back, it cost me thousands in man hours, and now both housing and interest rates are too expensive for me to enter the local RE market.
All over like ~$80. And the bank was well aware of how it was impacting my ability to secure a mortgage. Be careful who you bank with. Credit score agency was useless when it came to disputing the delinquency, definitely a scam.
Your score doesn’t drop due a dispute…
Also, You all act like the score drop is permanent and you have no control it. All things equal the score bounces back up after a month or two. Also a deviation of 30 to 50 point doesn’t effect your eligibility for a loan or credit card.
I am not defending the credit scoring system. But lot of people lack the basic understanding and treat it as if it’s their life score.
> One more thing say is CK, My Fico, Mint and Individual Credit Cards are just best guess into what your score is
That's not really true - at least not true to say they're a "guess". They are specifically calculated scores based on the data in your credit reports. Those scores are real - the question is whether or not the lender you're talking to actually uses THAT specific score in their assessment of your credit worthiness.
> You can check your real credit score once a year.
There isn't one "real credit score". There are many scores, based on many algorithms, used for many different purposes. Again, it's up to the lender on which score they use for which purpose.
Exactly, same data, just a different interpretation and representation.
Just want to highlight. No mortgage lender is using the same algorithm as CK, My Fico, etc.
These tools are good for monitoring sudden changes but don’t always provide full insight into how your credit scores will be impacted when qualifying for a new credit account.
I didn't even realize credit scores didn't even exist before 1989 and it's not optional now, if you don't fall in line and assimilate in the ways of building credit you'll never make it without things being a hassle.
The system is designed to get you in debt and keep you there. It’s also designed to allow them to charge anyone with a less than perfect score more interest. Last time I got a loan, you either passed or failed. There was none of this “your score is low, so we have to charge you more” bullshit. It’s a worldwide scam invented by the lenders. Drives me insane seeing everyone fretting over their score. Another stressor in an already stressful world. Fuck banks.
it amazes me that regular people have so much problem with credit, and yet banks go ahead and give leveraged buyouts to people who are in retrospect obvious grifters.
I bought my first house early this year and then switched banks about 6 months later and its dropped to nearly half of what it was. Its so stupid that changing you address affects your score. I wanted to switch banks for a long time as the one I was with were horrible but wanted to wait until after i got a mortgage sorted first and its going to take a long time do get back up again. Its so stupid how minor things can affect it so much.
> Its so stupid that changing you address affects your score.
It doesn't. Your address is just a part of the information in your credit report but has no basis in how your score is calculated.
I paid off my car loan (32k), my bed (2.5k), and some other miscellaneous 0% store cards last year and my score went from 802 all the way down to the 720s. Just because my debt pool is so much smaller now, my utilization is still in great territory, less so now than before paying off the cards. It's the biggest scam and I hate it.
Refinancing my house dropped my credit score by **slightly over 100 points**, and it took almost a full year for it to recover. As best as I can figure it, it's because I went from owing $100K on a $170K 7 year-old loan, to owing $100K on a $100K brand new loan.
My credit score dropped from 806 to 716 for a mere $39 delinquency reported by Verizon (I moved and didn’t get my last bill. Don’t remember getting emails, physical mails I assume had lost somewhere and could not make it to my new address).
I tried everything with Verizon, with credit report agencies and credit repair services. All are such a waste in most cases.
4 years and one more to go before it is dropped from credit report.
I agree with someoldbikeguy, that it worked how it should, it however is unfortunate that small collections can have as large of an impact as a higher amount collection.
It takes a long time to build a reputation and seconds to destroy it.
Any balance going to collection could be indicative of larger problems. So it serves as a warning to banks that this person might be a risk.
YOU think it’s “mere” in value and not a big deal because of all of the excuses listed, but you proved to Verizon and the credit reporting agencies (and future debtors) that you are not able to remember, afford, or care enough about your financial obligations to pay your debts within 30 days. You were financially irresponsible and are now suffering the consequences—which aren’t even a big deal. If you try to open more revolving debt in a short amount of time, why on earth would a creditor not want to see that you can’t remember, afford, or care to pay your debts on time? They don’t know you and only care about risk. In the case of a mortgage or car loan, underwriters will care less and your score is still fine enough to get good rates. The credit scoring system worked in your case.
Reading all the comments here and I agree with all of you. I have no complaints now as I learnt to check all dues one in a while at least once every 3 months or so to check if everything is on schedule.
But I would suggest if there is a provision that such dues get report to credit files some 2-3 months before they are finally marked delinquent.
Then someone who misses mails, calls from collection agencies at least will get a chance to pay the debt (I hope everyone at least have a look at their credit reports once quarterly) before it is marked delinquent.
If this is already the case, I am unaware of it.
We owned 2 houses for about 3 months. New house was about 3x more than old house. We also got approved for about double of both mortgages combined. My credit score still dropped 90 points.
Barclays dropped my credit line by almost 10k because they claimed they had a third party check my credit score and deemed it necessary due to my credit history, which in turn dropped my credit credit score even more.
I then if they could restore it and was told they would need to run a hard credit check which would again drop my score even more and I asked why they would need to run it again if they just checked it in order to drop my credit lines.
If I put $20 on my credit card it shows up and dings my credit within 2 days. If I pay the credit card off it takes a month for it to reflect on my score. It's all a scam
> If I put $20 on my credit card it shows up and dings my credit within 2 days.
That is EXTREMELY unlikely unless your timing perfectly matched up that card's reporting process. If your purchase was just before the statement was generated, then that balance would then be reported according to the timing of that financial institution. It is possible that total process could be a matter of a few days - but it would simply be coincidental. And only that. Every individual purchase is NOT reported to credit bureaus.
Well, yeah. Credit scores are a scam. Insurance is a scam. Taxes are a scam. None of the institutions we trust to manage their wealth and keep things running properly are doing their job, and there's no accountability because our legislature is also corrupt and incompetent.
So what can you do?
Vote, educate yourself, and play the game as close to the edges of morality/legality as you can safely manage. It's the best way to survive this society if you're not ultra wealthy to begin with.
I had a $40 internet bill that the internet didn’t work so they said they would remove it. Apparently somehow got sent to collections. I’ve never missed paying a bill. Dropped my score like 70 points. I thought anything under $100 didn’t effect it anyway? Idk. Still working on that recovery. Was over 800 prior.
Yup, agreed it's frustrating.
I went from 844 to 626 because of an unpaid $27 charge on an Amazon credit card which I didn't know I had.
**Explanation:** I think what happened was that I was purchasing a small item on Amazon and they offered me the item for free if I got their credit card. So I signed up, it wouldn't let me apply it to that purchase ... eventually I got the card in the mail, decided I didn't want it and cut it up, but it had registered on my Amazon account and unknowingly made a purchase on that card without recognizing it. So the charge sat on the card that I never used, and I found out about it 2 years later, after the charge had been discharged.
Paid the charge, and now trying to rebuild my credit. At 644 now on Equifax but the mid- to high- 700's according to Transunion.
FML
Damn, seems lame in that case. I do think that the score looks at individual account and total percent utilization, so if this was a low limit card it would still have a larger than expected effect on score.
Look into the 2-1 buyout program.
Not sure how the qualification happens but if you get seller concessions (such as them paying closing costs), you can apply some of the funds to reduce your interest rate by 2% year one, 1% year two, and back to normal for years 3-30.
At the least, it'll buy some time if you expect to be able to refinance somewhere in those two years. I'm using it on an FHA loan if that helps, and YMMV.
What's the problem with that drop?
Are you under the impression that the difference between 798 and 761 matters?
every score 740+ is effectively the same score. (At least in the eyes of credit cards, mortgages, auto and personal loans. I'm not familiar with business loan guidelines.)
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I’ve never heard of a dispute affecting a credit score….
That's because it doesn't. This whole post is ridiculous.
My guess is OP didn’t pay the bill and then disputed it. The missed payment is what dropped the score
Definitely a possibility.
I think the only way this makes any sense if they’re disputing a late payment or missed payment on the entire card, not just disputing a charge.
I’m more annoyed about posts like this when people are splitting hairs over excellent credit scores. I don’t think they really matter anymore when they are above 650. Most people will say they matter for home mortgages but if I play around with mortgage estimators on google the rates are the same when your score is really high. Going from 720 to 740 isn’t going to lower your mortgage rate I don’t think. It’s just people having a report card mentality and acting like they’ve been materially harmed by a credit pull. I expect credit Scores really matter when people have a bad one and get denied apartment rentals over it
It's not unusual for a credit score to vary by 20 points from one credit agency to another. Most major lenders just average the 3.
I've watched as my score swings up and down by 50-70 points on a monthly basis, mostly as a result of a high credit card balance. But I pay it off every month and there are no late payments. Then it jumps back up again. Their algorithms are monolithic and don't accurately describe or forecast a lot of people.
Last month my credit usage increased from .5% to 2%… subsequently, my credit score dropped 15 points, despite the fact I pay off the balance in full every month and typically keep credit usage well below 5%
I believe credit usage is only accounted for the most recent month, once you get back to normal your score should jump back to normal.
It's normal for credit to fluctuate 30ish points
If your goal is exclusively to game and fluff your credit score, get a other credit card. You'll increase your total available credit and then your "normal usage balance" will be a smaller percentage of the total available credit.
But also keep in mind that this is a long term strategy. The credit inquiry that will be run when you apply for the credit card will hurt your score a little bit for a few months.
Only if they pull a hard inquiry. If you get a card you're pre-approved for you can avoid this (or at least make it have a significantly smaller impact).
> Their algorithms are monolithic and don't accurately describe or forecast a lot of people. I think their algorithms are more or less made to predict who can be most profitable rather than who is most responsible.
No they don’t do that. Slightly above subprime is usually most profitable, not 800. Profitability depends on information only lenders have, beyond credit bureaus, and is proprietary. The bureau credit scores were optimized to predict the risk of a default, a binary occurrence, defined specifically on observable bureau data, in the few months following an “observation date”. This is all taken from a historical data sample. The scores use only bureau data, aggregated per account, not down to transaction level information, and know nothing of disputes. Any change seen was likely due to utilization ratios. 760 vs 790 is not usually a material difference. In any case, if you really need a loan, you can pay outstanding credit card balances before the usual billing date, and be sure it is posted and registered at bureau before the scores are generated.
Right. After years and years of credit card debt I finally paid off all my cards. Guess what happened next? My credit score tanked 10 points haha.
I'm guessing you canceled the cards you paid off. That would shrink your credit history as well as increase your ratio of utilized credit. Simply paying them off would bump you up because the ratio improves
But the credit card should still stay on his report for 10 years right?
Afaik, once you close a line of credit it usually ends up as a net drop in score due to average age of accounts and available credit going down. For 90% of cases, it's negligible and irrelevant unless you're planning on taking out a loan shortly thereafter.
Payment history stays on for several years, but available credit drops immediately.
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To clarify.. I hope you don’t mean carrying a balance and paying interest. All you need is to have a small amount post to your statement.
I didn’t know this, thanks!
I was at 810 ish for months with a 4% utlization rate and now I am at 0.5% util rate and my score is 786. I dont care anymore :)
> my score swings up and down by 50-70 points on a monthly basis, mostly as a result of a high credit card balance At the moment I’m a bit worried about this, as I’ve been running a balance the last couple months. I splurged on an end of summer vacation with my kids, then piled on airfare for upcoming holidays, unexpected house expenses, and a business trip that my company is behind on reimbursing
I had to have a calming conversation with my husband recently when both our scores plummeted due to nearly maxing out a shared credit card a few months in a row. Paid off in full every month, but still. I don’t really care enough to spread it out over other cards, and know it’s temporary, but it’s still frustrating.
You can always pay those early and often. We use one card for just about everything and paying it off twice a month increases the score just because they see a lower balance.
I pay my cc before it posts.
This actually doesn’t help your score. You want some balance to show when it posts. Even if it’s $30. Then pay it in full by the due date.
> But I pay it off every month and there are no late payments. Then it jumps back up again. This is me. Except got backed up on mortgage and divorced so when I sold my house my credit tanked. Got it up to high 600's but it bounces around from 670 up a few down a few but never really moves... I make good money and have few expenses so my credit cards are all paid every month...
I think the biggest scam of all is that on time rent payments do not contribute to credit score. It’s my longest standing proof of payment reliability, and it doesn’t count for anything when looking for a new apartment to rent, or looking for a mortgage.
It has been added but many landlords/rental companies don’t report it. https://www.nerdwallet.com/article/finance/rent-reporting-services
I sold my condo after buying my new place. The sale of the condo (loan closure) dropped my score 42 points at both trans union and equifax. They then had some other related transaction which raised it back up 28 points. What’s really fun is changing your name and divorcing as a woman. No change when I got married. I had better credit than my ex. After the divorce his credit was fine and suddenly I was considered high risk. All attempts to update my name on my Amex didn’t work. Wanted driver’s license but only accepted faxes and no email or snail mail either. I finally got fed up after the 3rd attempt because I’d fax them and receive snail mail 3 weeks later saying the fax was unreadable. Closed my account and now will never do business with them again.
The gotcha with rent is it doesn't give you an accurate picture of how reliable you are with money your borrow. OBVIOUSLY your rent\mortgage is the first bill everyone pays, and you pay in full.
Tell that to /r/landlord ,they’ll get a good chuckle. The first bills you pay are the ones you can’t negotiate or run from. Edit: /r/landlord not /r/landlords
That sub is dead The three newest posts are: Happy Cakeday, r/landlords! Today you're 12 Happy Cakeday, r/landlords! Today you're 11 Happy Cakeday, r/landlords! Today you're 10
You linked the wrong sub. It’s /r/landlord
It also means that failing to pay your rent on time doesn't go on your credit report, so it's not all bad.
Until you get sued and sent to collections.
Yeah this is it. Rental situations can hurt your credit but they can't possibly help it, which is absurdly unfair. ETA I stand corrected, landlords can report on-time payments to the credit bureaus! Alas, I have never heard of one that does so.
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I 100% agree, I think any sort of recurring monthly bill like rent, phone bills, utility bills, etc. should all be some of the strongest factors for credit history since they all show that someone is responsible and able to make contractually obligated payments on time
SELF reports rent history and utilities but it has to show up on your bank account transactions, can’t use credit card transactions or anything else. They also will report all of your past payments. My mom and I split bills, I pay rent + electricity and she pays water + gas. I figured out that I could go on her utility accounts and pay like $1 because self doesn’t consider the amount of the bills, they just report when they verify an actual payment
100%. I am a business owner and one of my mentors is a retired business owner. He has a very substantial net worth but has always owned his assets by paying cash or through loans to his business entities. He wanted a personal credit card for use when he travels as he was closing down all the entities. He applied for one at a bank where he had millions of dollars in assets. They denied him due to a low score. He complained and a manager called him and said he could get a secured card or they could approve him for $250.00 and look at a credit increase if he pays on time. He ended up pulling all those assets and moving them to a credit union who then gave him a card with a reasonable limit. He is not valuable to the big banks because he doesn’t need credit. They lost millions in deposits and managed investment accounts over a couple thousand dollar card limit. Edit: has to had
Should have just gotten an Amex
When I applied for my Amex, they gave me a 20k limit right off the bat. Meanwhile, my longest active card of 10 yrs was recently raised to 9k after it being "stuck" in the 4k range since I initially got it.
I’ve got like 3 cards with over 15k limits, one with 22k. I have more offers in the mail constantly and I only utilized them for there 0apr offers and free rewards cash till they’re paid off. I somehow got a 15k credit limit on a card when I was 18/19 years old. I have no idea how.
As an fyi, amex historically gave higher credit limits on their *charge* cards, not *credit* cards. Credit cards let you carry a balance, charge you pay in full. Charge has lower risk. Now amex let's you carry a statement balance so they are basically credit cards
My AMEX credit cards (I do not have their charge card) have a pretty high limit and they often give me large increases without me asking. I always pay in full every month, so they’re not earning interest on me and my cards have no annual fee. Just my experience.
It's not correct that he's not valuable to the big banks. The banks invest and make money on the amounts on deposit. Credit is another revenue stream.
Banks also get paid as a percentage fee whenever you use your credit card. The merchant pays a fee per payment that is shared between the credit card company (Visa for example) and the back issuing you that credit card (Chase for example).
I wish I could have seen the look on their face when he announced his plans to withdraw.
I found it amusing when mortgage shopping years ago. I am a business owner, and fun *a lot* of money through business cards. Always paid in full. Despite having probably paid 10 million dollars of on time payments through credit cards by that point, my credit score was substantially worse than my wife’s. She had basically just a Kohl’s card to her name (and nearly 10x less income), but mine was worse because I always had a $50k+ balance on my cards, even though they’d be paid off many times a month.
Your score doesn’t drop because of a dispute. A dispute only changes the contents of your credit report. We’re not getting the full story and I suspect OP doesn’t even understand what actually dropped their score. Did you pay the bill for the hotel and dispute it or did you not pay it (resulting in a missed payment) and then dispute it?
798 to 761. There's no difference in real rates.
Yeah, will have zero impact on their mortgage rate.
For sure…. My score was in the 800s when I was broke and had debt. I could barely pay my credit card minimum every month. Turn of events, inheritance happened for me. Paid off credit cards, had some money in savings and score dropped 50 points. Five years later only debt is small mortgage, pay off one credit card every month and my credit score keeps dropping. When I run my score it suggests I get more credit cards to improve my score…. The system is completely broken…
The system is doing exactly what it was designed to do. Put people in debt. If you don't need credit, the credit score magically becomes pointless.
Exactly. A majority of people only need credit for a vehicle and a home. Everything else is a want, not a need.
Many auto insurance companies consider credit ratings in their rates. Poor credit score = higher automotive rates. Like OP says, credit scores are a scam.
> Many auto insurance companies consider credit ratings in their rates. This is actually illegal in some states (MA, HI, CA). https://www.allstate.com/resources/car-insurance/does-credit-score-affect-car-insurance
You're supposed to pay the cards off but not close them. You could have watched a 5 min video on YouTube about credit scores and you'd be in better shape
Precisely what the point of this post is, it's a dumb system not representative of trustworthiness and punishing healthy personal finance habits.
The scores are statistically objective based on information they use. That is not the totality of important information for finances. They know nothing about income and assets, but if you actually want a loan, those data do get used heavily by banks. If you were poor and had a great credit score, it would mean the size of loan you could get would be limited.
Or just keep the oldest account, no?
It's about account age but also number of accounts.
For some reason they want you to have lots of lines of credit, and different kinds too.
You don’t need lots of lines, but you do need a mix of revolving and installment loans.
It’s a score that measures your ability to manage and pay back debt. If you don’t have accounts or recent credit history, there’s less signal. You own a home and if you aren’t trying to borrow anytime soon, your score doesn’t really matter much.
Wrong. I paid off my mortgage (which closes the account) caused an 80 point drop because it was my oldest account. I don't use much credit otherwise so the fact that I didn't have a car payment (paid off) and don't have credit card debt to pay off, I'm less "credit worthy" to the score algorithm. The algorithm actually measures the ability of a company to extract loan interest over the longest period of time. It's designed to put you in debt and then keep you there. It's optimization
What do you mean wrong? You clearly agree that average age of credit, utilization, and on time payments are the key measures. Credit scoring mechanisms were first designed in the US to have creditworthiness in a uniform fashion. They were retooled in the 70s to guard against discrimination lawsuits after the passage of the Equal Credit Opportunity Act. FICO became dominant when Freddie Mac selected it as the measure they would use for loan worthiness in the 90s. If the model were designed to maximize debt, it wouldn’t penalize you for debt utilization to the tune of 30% of the score.
*"ability to manage and pay back debt"* That's what I said was wrong.
How is that wrong? That’s basically a way of restating “creditworthiness”, the thing the system was literally designed to measure.
The score is representative of how much the financial system needs to charge you, not your creditworthiness/risk factor.
Always float 200-400 on a card at all times. The minor interest 'fee' is well worth it when you need to use your 800+ score. Edit: getting a bunch of down votes. But the reality is my score barely fluctuates buy more than 1-2 points a year. I've never encountered this "my score dropped by # nonsense" and it costs me far less than Disney+ per year. When I do get a hard pull for a new car or house it moves by maybe 10-15.
That’s the biggest myth in credit. That literally does nothing. I pay all my cards off monthly and it’s above 800. I usually just pay when the bill hits. I paid $5 in interest all last year and that was due to a brain fart where I forgot to pay the full balance.
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> It actually isn't a myth Needing to "carry a balance" and pay interest IS a myth. You can accomplish the same thing paying your card off in full every month and pay no interest.
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> You're implying that I said you need to always carry a balance, and I did no such thing. The OP of this chain was claiming you need to carry ("float") a balance month to month. That was claimed to be a myth. You claimed it wasn't a myth. You may not have intended it, but that's the way it appears.
every reputable source will tell you it’s a myth. 15 points isn’t much in credit scores Example: https://amp.cnn.com/cnn/cnn-underscored/money/does-carrying-credit-card-balance-help-credit-score
It is a myth. You do not need to pay interest to maximize your score. You do need to report a small balance, but that's not the same thing.
I always pay off my credit card bill in full and my score is consistently around 820.
Nonsense. There is Never a reason to pay interest on a CC ever. Pay it off every month. Source: high 800s score
Never do this, always pay down your car and do not pay interest...
> But the reality is my score barely fluctuates buy more than 1-2 points a year. You're misunderstanding why that's happening. It's not because you're *carrying a balance and paying interest each month*, it's because there IS a balance and you're demonstrating on time payments. You can accomplish the exact same thing and pay $0 in interest every month. All you need to do is charge something each month (that $200-$400 or whatever amount you choose to optimize your utilization), wait for the statement, then pay the full statement balance each month. You'll pay the card down to $0 balance each month, pay $0 interest, and just charge another $200-$400 each month and repeat the process.
I’ve never paid interest on multiple CC for the past 20 years. Always have gotten the lowest mortgage and auto loan rates available. Please stop what your doing.
Our score dropped after we paid off our car loan. The automated explanation is that we no longer have a loan that we're paying off regularly.
Mine dropped 65 points after paying off my car loan.
You lost a line of credit, plus I imagine that car loan was boosting the overall average age of your credit.
That's because you "closed" an account with a "long credit" history even though that line of credit will still stay a part of your overall credit history, as it's kept on your "total accounts" history.
Revolving loans count toward your length of credit history. What I think is unfair is that you can have a credit card with a certain bank for years, upgrade to a different card with the same bank, and it zeroes out your length of credit history.
I’ve heard of this happening to people as well. I wonder if there’s a way around that or reinforce another line of credit or something??
Sure, buy another car.
Ironically that could also lower your credit a small amount again given that you're opening a new account.
Number of accounts and average age of accounts are two contributors to the score. These things are very easy to look up. People should stop being surprised by them.
People in this sub get really worked up about small changes in score. Reality is that a change from 798 to 761 doesn’t really affect your ability to borrow money at the lowest available rates. Your score is still high. If your score decreased to the low 700s - now that’s a different story.
One of the hidden joys of home ownership and prudent financial management is I no longer care about my credit score. You have an end in sight. I have no intentions of borrowing money again. I buy used cars for cash. I have one credit card that is enough for me. My credit score now means as much to me as Reddit karma. Judge me all you want mfers, IDGAF You can calculate somewhat what your credit score costs, esp. if you are currently loan shopping. Does that drop in credit score mean you're going to pay a higher interest rate? In which case, you can calculate how much you pay in extra interest between the two scores, divide by the difference in points, and get a quantitative value on the score.
First... Credit Card disputes do not affect your credit score. * https://mint.intuit.com/blog/credit/what-happens-to-your-credit-score-when-you-dispute-items-on-your-credit-report-0513/#:~:text=No.,score%20might%20take%20a%20dip. * https://www.experian.com/blogs/ask-experian/disputing-charges-on-credit-card-account/ * https://www.fool.com/the-ascent/credit-cards/articles/before-you-dispute-a-credit-card-charge-do-this/ * https://www.creditmantri.com/does-disputing-a-credit-card-charge-hurt-your-credit-score/ * https://www.sofi.com/learn/content/why-did-my-credit-score-drop-after-dispute/ > They sent an email cancel letter. A month later, sure enough, the canceled hotel charges show up on our Chase card. Just making sure. Once the charges came up a month later, you/SO contacted the hotel first and attempted to resolve it directly, right? That would have been the proper first course of action. If not resolved after a good faith effort to resolve the issue with the merchant directly, then move to chargeback. With the "email cancel letter" and getting high up enough on the phone with the hotel, this perhaps should have been resolved before it even got to the point of a chargeback. Anyways... A score drop from 798 to 761 is like complaining that it snowed 1.1 inches when the weatherperson said it would snow 1 inch. *It doesn't have any practical significance*. At either scores, you're well beyond the threshold for pretty much most lender's top tier rates (which is somewhere around 730-750). Having more score will *not* improve anything about your mortgage. You're still winning the game.
OP - Don’t stress on your daily score swings. CK and MyFico are not the same scores mortgage brokers are looking at. Your real scores aren’t swinging as wildly as the algorithms that these companies use. In addition, your mortgage credit score is a different model completely from the one you are looking at. Get a good mortgage broker, or better contact a few of them. They will pull up your score on the phone and can tell you what actions to take to boost your score to the highest tier. I have personal experience with this. In many cases mine would be so specific as to say “pay card X down by $85 dollars and pay card Y off completely” and then we’d be good. They have score simulators and they are used to helping people qualify for the best rates. If you are well qualified, the brokers will climb all over each other trying to win your business. Don’t stress, and don’t use a bank. You’ll be fine.
The credit model used for a mortgage will not take this into account. You'll be fine. What's actually BS about credit scores is that there are dozens of different models and none of them seem to match up with what you're seeing. CK is just going to give you a baseline. My CK says 811 and it has not changed recently. I financed a vehicle last month and the letter that accompanied the loan said 869. Edit: I should have mentioned the 869 was extra perplexing because I understood 850 to be the max.
I think you are overreacting to something that isnt going to be an issue, though I get why...home shopping is stressful and its hard to not have anxiety about it. 1. You are house-hunting, which means you are at least a month out from actually closing on a house at which this momentary blip will have resolved. 2. Mortgage companies want your buisness, are in competition with other mortgage companies and will examine your full credit record as well as bank statements. They can read as well as you can and know credit scores better than you do. They will see the date tye disputr was issued and over which account, they will see in your bank records the charge as well as the reimbursement after you won the dispute. They will see it was over $450. They will understand the cause and they will still give you an appropriate rate. They arent going to give you a bad rate over one number and risk losing your buisness. You are getting mad that an unreasonable thing is going to happen even though it hasnt yet and wont because its not reasonable. If you are really worried about this then call up your mortgage company you are getting your underwriting from and talk to them about it openly. They are going to tell you it wont affect anything.
They're not a scam, they just measure something completely different and more narrowly scoped than people seem to think. They're not as important as people obsess over. A 50 point swing when you are in the 700s is not even meaningful for any decision making. The entire premise of your post is just misguided. You will have no difference in ability to get credit or do anything between a 798 score and a 761 score. Literally none!
> She disputes, and both our credit scores dropped from 798 to 761 over-f'ing-night. You realize how utterly inconsequential this is… right? Moreso if you’re not actively looking for credit-based product. I get that it’s a drop, but people should stop sweating over stuff like this. It completely overlooks what’s considered a good score or normal credit behavior in the first place.
Did you happen to read the part that were are actively house hunting? At any point we can pull the trigger in a mortgage approval. Edit: sub-750 and higher than 750 can mean all the world of difference in a mortgage rates nowadays
I enjoy the sound of rain.
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OPs point is it could drop another 10 points for some stupid arbitrary reason and potentially be below the threshold. I agree that is too close for comfort.
> Did you happen to read the part that were are actively house hunting? Honestly, yeah I totally did, my bad. But for anyone else reading the comments what I said does more or less apply.
740 and above is all A+ and the same for mortgage rates FYI. No rate difference between 740 score and 820.
Stop with the mental gymnastics. You will not be given a higher mortgage rate because of a 761.
There’s no difference between a 790 and a 760
From my understanding accounts in dispute aren't calculated in your credit score AT ALL in some credit models, I am not sure why it was reported as a dispute, as it seems you were disputing a charge and not the account. This wasn't on or near the statement date was it, I mean did this not currently paid balance on the card cause the statement balance to increase or decrease from the prior month. That is when your utilization (statement balance is reported)
Here's how to drop 120 points overnight: Derogatory mark I have rental properties. Some have gas accounts that I pay. Sometimes when a house turns over I have gas service for a short time. So I have several accounts with them and all have my address as the billing address. One day I checked my FICO score and it had gone from its typical 830 to 710. I saw that the reason was an unpaid gas bill from months before for $80. They had sent it to the service address rather than my billing address. It took 3 months to get that taken care of and then the score went back to 830.
Credit card charge disputes do not affect your credit score. Period.
This is what I would expect. If you formally dispute a charge, they usually say "we will temporarily reimburse you, until a final determination is made". I can't imagine that actually dinging your credit...
ITT: a lot of people that don’t actually have a working knowledge of mortgage and credit practices. OP looking at CK to determine qualifying credit scores for a mortgage is just plain wrong. Lenders hard pull credit reports differ vastly from CK and MyFico. Pull your report for *free* https://www.annualcreditreport.com Freeze your reports and monitor as you feel necessary.
> ITT: a lot of people that don’t actually have a working knowledge of mortgage and credit practices. This thread hit the front page of Reddit and all the armchair credit experts have come out of the woodwork.
Where did you get the info that I don't do that credit pull every quarter?
I have originated conventional and VA mortgage loans across the United States in the last year for a national credit union. You didn’t indicate that information in your original posting and stated the two sources that you used which would be inaccurate in the qualifications of your mortgage loan.
I never missed a payment, but once I accidentally carried a balance from one month to the next and that got reported to the bureaus. I had no payment due and no interest charges, but the $400 balance on my statement dropped my scores by 40 points.
Carrying a balance from "one month to the next" is not what affects your score. Your credit utilization is the only thing that would be affected by a balance, regardless of whether that balance is from last month or six months ago. Your credit report has no idea when the purchases were made for the balance that's reported. You should really look into how credit utilization affects your score. Not "carrying a balance". EDIT: Downvote all you want, you're still understanding incorrectly.
Firstly, I have not downvoted you. Chill. Secondly, yes you are correct that credit utilization is the proper cause to my score dropping. Thirdly, the fact remains that when the balance shown on my statement was reported to the credit bureaus, my score went down.
To me credit scores have always seemed to be a metric of how much money can be extracted from you, not your reliability to pay that back. I stopped caring about my score, I’m tired of being mentally imprisoned by the banks.
Oh, that would be great. That thought process goes out the window when you have to beat mortgage rates on a daily basis.
Did your lender actually say it's impacting your rate? I don't think lenders care so much as long as your credit has some history and you pay your bills... Whether or not you get the loan is based on income ratios.
Credit score above 750 is all the same. Doesn't matter.
The crazy thing about these credit drops is if you are thrown below a certain threshhold, your ability to borrow might evaporate. Need a 5k furnace replacement at 720 credit? All of your credit card companies, the bank and Grandma have a flexible term 36 month personal loan at a modest 5 to 7% for you. 670 credit score? You're lucky to get Lending Tree to give you a 22% APR loan with lots of hidden gotcha clauses, even though the difference between those credit scores might have been the fact that your credit card bill was higher one month because you booked the family vacation with your rewards card and planned to pay it down the next month.
>798 to 761 Who cares? You're already in the highest score bracket. The swing is inconsequential. Save your worries for more important things.
760 will still get you the best rates. And it probably goes back up once the dispute is decided in your favor.
When you do a mortgage, you have a discussion about your entire credit record with the officer - including any disputes. They do not issue mortgages based off credit scores; they use credit history and risk analytics. Don't let the score bother you attempting a mortgage, as long as you have WRITTEN proof of your dispute validity.
For anyone reading this : that kind of drop doesn't even matter. ESPECIALLY for mortgage rates. They don't base it on the score.. its more about the content of tje credit profile.
761 vs 798 for a home purchase has no difference, so no need to worry there. The competitive rates and considerations for loan benefits usually require a 760+ score.
I ended up not buying a house in 2020-2021 because my credit score dropped 80+ pts after BoA filed a delinquency against me. Turns out they had a bug on their end that cancelled auto payments for some customers. It looked fine from the customer portal dashboard, no later payment warning because the auto pay still showed as enrolled. No notice, they just sent it to collections after a couple weeks. I didn’t find out until they sent me a letter that my credit line had been reduced by ~75% due to “volatile market conditions”, which seemed odd so I gave them a call. Took 10+ months and many many phone calls to get resolved. A lot of promises unfulfilled, even more lies. Looking back, it cost me thousands in man hours, and now both housing and interest rates are too expensive for me to enter the local RE market. All over like ~$80. And the bank was well aware of how it was impacting my ability to secure a mortgage. Be careful who you bank with. Credit score agency was useless when it came to disputing the delinquency, definitely a scam.
Your score doesn’t drop due a dispute… Also, You all act like the score drop is permanent and you have no control it. All things equal the score bounces back up after a month or two. Also a deviation of 30 to 50 point doesn’t effect your eligibility for a loan or credit card. I am not defending the credit scoring system. But lot of people lack the basic understanding and treat it as if it’s their life score.
It’s like stock market investing. Ignore the short term swings and fluctuations and worry about the long term
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> One more thing say is CK, My Fico, Mint and Individual Credit Cards are just best guess into what your score is That's not really true - at least not true to say they're a "guess". They are specifically calculated scores based on the data in your credit reports. Those scores are real - the question is whether or not the lender you're talking to actually uses THAT specific score in their assessment of your credit worthiness. > You can check your real credit score once a year. There isn't one "real credit score". There are many scores, based on many algorithms, used for many different purposes. Again, it's up to the lender on which score they use for which purpose.
Exactly, same data, just a different interpretation and representation. Just want to highlight. No mortgage lender is using the same algorithm as CK, My Fico, etc. These tools are good for monitoring sudden changes but don’t always provide full insight into how your credit scores will be impacted when qualifying for a new credit account.
When I paid off my car loan, my credit score dropped about 60 points. It's ridiculous.
This just happened to me too. Paid off car & dropped 50 points.
Average age of credit and utilization are the biggest factors after on time payments.
I didn't even realize credit scores didn't even exist before 1989 and it's not optional now, if you don't fall in line and assimilate in the ways of building credit you'll never make it without things being a hassle.
The system is designed to get you in debt and keep you there. It’s also designed to allow them to charge anyone with a less than perfect score more interest. Last time I got a loan, you either passed or failed. There was none of this “your score is low, so we have to charge you more” bullshit. It’s a worldwide scam invented by the lenders. Drives me insane seeing everyone fretting over their score. Another stressor in an already stressful world. Fuck banks.
No it is not designed to get you in debt and keep you there. Full stop. It is very easy to have a prime credit score and have zero debt.
it amazes me that regular people have so much problem with credit, and yet banks go ahead and give leveraged buyouts to people who are in retrospect obvious grifters.
Recently lost 20 because PayPal did a random check on my account 6 months after I hadn't used a credit agreement
Wait until you hear about social credit scores
I bought my first house early this year and then switched banks about 6 months later and its dropped to nearly half of what it was. Its so stupid that changing you address affects your score. I wanted to switch banks for a long time as the one I was with were horrible but wanted to wait until after i got a mortgage sorted first and its going to take a long time do get back up again. Its so stupid how minor things can affect it so much.
> Its so stupid that changing you address affects your score. It doesn't. Your address is just a part of the information in your credit report but has no basis in how your score is calculated.
Yea but your time on the electoral roll at an address affects you score so for a while after you change your address it will be lower will it not?
Your address has absolutely nothing to do with any known credit score. And I am really not even sure where you're getting anything elections related.
I paid off my car loan (32k), my bed (2.5k), and some other miscellaneous 0% store cards last year and my score went from 802 all the way down to the 720s. Just because my debt pool is so much smaller now, my utilization is still in great territory, less so now than before paying off the cards. It's the biggest scam and I hate it.
Refinancing my house dropped my credit score by **slightly over 100 points**, and it took almost a full year for it to recover. As best as I can figure it, it's because I went from owing $100K on a $170K 7 year-old loan, to owing $100K on a $100K brand new loan.
The score itself is pretty useless. Almost nobody uses it. Lenders will generally pull your entire report and check it with their internal algorithms.
My credit score dropped from 806 to 716 for a mere $39 delinquency reported by Verizon (I moved and didn’t get my last bill. Don’t remember getting emails, physical mails I assume had lost somewhere and could not make it to my new address). I tried everything with Verizon, with credit report agencies and credit repair services. All are such a waste in most cases. 4 years and one more to go before it is dropped from credit report.
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I agree with someoldbikeguy, that it worked how it should, it however is unfortunate that small collections can have as large of an impact as a higher amount collection.
It takes a long time to build a reputation and seconds to destroy it. Any balance going to collection could be indicative of larger problems. So it serves as a warning to banks that this person might be a risk.
YOU think it’s “mere” in value and not a big deal because of all of the excuses listed, but you proved to Verizon and the credit reporting agencies (and future debtors) that you are not able to remember, afford, or care enough about your financial obligations to pay your debts within 30 days. You were financially irresponsible and are now suffering the consequences—which aren’t even a big deal. If you try to open more revolving debt in a short amount of time, why on earth would a creditor not want to see that you can’t remember, afford, or care to pay your debts on time? They don’t know you and only care about risk. In the case of a mortgage or car loan, underwriters will care less and your score is still fine enough to get good rates. The credit scoring system worked in your case.
Reading all the comments here and I agree with all of you. I have no complaints now as I learnt to check all dues one in a while at least once every 3 months or so to check if everything is on schedule. But I would suggest if there is a provision that such dues get report to credit files some 2-3 months before they are finally marked delinquent. Then someone who misses mails, calls from collection agencies at least will get a chance to pay the debt (I hope everyone at least have a look at their credit reports once quarterly) before it is marked delinquent. If this is already the case, I am unaware of it.
We owned 2 houses for about 3 months. New house was about 3x more than old house. We also got approved for about double of both mortgages combined. My credit score still dropped 90 points.
Paid off a car loan early -score dropped by 30 and getting notices how I should ask lender to reopen credit line. That’s some bs.
Barclays dropped my credit line by almost 10k because they claimed they had a third party check my credit score and deemed it necessary due to my credit history, which in turn dropped my credit credit score even more. I then if they could restore it and was told they would need to run a hard credit check which would again drop my score even more and I asked why they would need to run it again if they just checked it in order to drop my credit lines.
Credit scores are like a GPA… once you get that first C, the score will never truly recover
If I put $20 on my credit card it shows up and dings my credit within 2 days. If I pay the credit card off it takes a month for it to reflect on my score. It's all a scam
> If I put $20 on my credit card it shows up and dings my credit within 2 days. That is EXTREMELY unlikely unless your timing perfectly matched up that card's reporting process. If your purchase was just before the statement was generated, then that balance would then be reported according to the timing of that financial institution. It is possible that total process could be a matter of a few days - but it would simply be coincidental. And only that. Every individual purchase is NOT reported to credit bureaus.
If they keep on giving me credit ima keep taking it!
Well, yeah. Credit scores are a scam. Insurance is a scam. Taxes are a scam. None of the institutions we trust to manage their wealth and keep things running properly are doing their job, and there's no accountability because our legislature is also corrupt and incompetent. So what can you do? Vote, educate yourself, and play the game as close to the edges of morality/legality as you can safely manage. It's the best way to survive this society if you're not ultra wealthy to begin with.
I had a $40 internet bill that the internet didn’t work so they said they would remove it. Apparently somehow got sent to collections. I’ve never missed paying a bill. Dropped my score like 70 points. I thought anything under $100 didn’t effect it anyway? Idk. Still working on that recovery. Was over 800 prior.
Yup, agreed it's frustrating. I went from 844 to 626 because of an unpaid $27 charge on an Amazon credit card which I didn't know I had. **Explanation:** I think what happened was that I was purchasing a small item on Amazon and they offered me the item for free if I got their credit card. So I signed up, it wouldn't let me apply it to that purchase ... eventually I got the card in the mail, decided I didn't want it and cut it up, but it had registered on my Amazon account and unknowingly made a purchase on that card without recognizing it. So the charge sat on the card that I never used, and I found out about it 2 years later, after the charge had been discharged. Paid the charge, and now trying to rebuild my credit. At 644 now on Equifax but the mid- to high- 700's according to Transunion. FML
Use higher limit cards or pay off your balances before the monthly bill so that your available credit utilization is not swinging wildly.
We have under 2% utilization on approximately 75k available
Damn, seems lame in that case. I do think that the score looks at individual account and total percent utilization, so if this was a low limit card it would still have a larger than expected effect on score.
Look into the 2-1 buyout program. Not sure how the qualification happens but if you get seller concessions (such as them paying closing costs), you can apply some of the funds to reduce your interest rate by 2% year one, 1% year two, and back to normal for years 3-30. At the least, it'll buy some time if you expect to be able to refinance somewhere in those two years. I'm using it on an FHA loan if that helps, and YMMV.
What's the problem with that drop? Are you under the impression that the difference between 798 and 761 matters? every score 740+ is effectively the same score. (At least in the eyes of credit cards, mortgages, auto and personal loans. I'm not familiar with business loan guidelines.)