Hey guys. I always thought I knew the basics of how credit scores work but, I was mistaken last night. I wanna say around 3-4 years ago, I checked my score for the first time online and saw ~780s. Last night I was curious to know what it was and saw that it dropped over 100 points at 659. Not sure when or how it happened but, I haven't changed anything since then. I use my card at least twice a week and immediately go online to pay it off. I was hoping someone here could explain what's going on and how to prevent that from happening.
How do credit scores work?
- Thread starter Delgado
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lankeeyankee
Banned
Pull a credit report from all 3 credit report agencies
Have you been late on any other bills at any time in the past 2-3 years? I found out the hard way a long time ago that it isn't just your credit activity that gets posted to your overall score. I got into a squabble with a local cable TV company several years back over a double charge issue. Refused to pay the extra month they were charging me for, found out (almost 2 years) later that every month I didn't pay the extra charge, they were posting a late/non payment negative on my credit record. After about 3 months I got it straightened out with the cable company, but the negative reports on my record remained.
You can request a printed record of your score and a lot of times it will show where the decrease came from.
Then again, it may have something to do with the economy in general. Everyone's score may have fallen in the last 3 years. Salesman from a local bike dealership coupla years ago told me that, at that time, 7 out of 10 new bike finance apps were being denied.
You can request a printed record of your score and a lot of times it will show where the decrease came from.
Then again, it may have something to do with the economy in general. Everyone's score may have fallen in the last 3 years. Salesman from a local bike dealership coupla years ago told me that, at that time, 7 out of 10 new bike finance apps were being denied.
Hillbilly.....u can dispute anything on ur credit report with the credit bureau. If u file a dispute that cablr company has 30 days to act or else it gets completely wiped off ur credit report. When I was doin real estate people were always surprised on whay was on their credit report and I had manu people dispute tgings and win.......worth a shot
All that happened almost 20 years ago, long since fell off the back side of my score report.
I was just throwing that out as an example of the other things besides your actual credit activity that can affect your score.
Plus a good bit of information to know, everytime you simply check your credit, it can affect it by 5 points each time
Unpaid medical bills you may not know about? Even a ten dollar copayment you missed can be on there as a charge off and affect it. Most of the time though it's folks who use their 'credit' very little who have medium scores. If you have one to two cards with a 10k available balance and only use a couple hundred and pay it off it doesn't show well. Having up to date revolving debt with several creditors actually raises your score. I know millionaires who live on a cash basis and have 600 beacons and I know folks who work at texaco making 2k a month with 800s. Many factors go into the agencies calculations of our score. Experian is usually higher than Equifax score.
Non payed bills are called charge offs. They look really bad when you are trying to buy a house. I found out while I was trying to buy a house a few months ago, a medical billing agency was trying to bill me for a workman's comp claim. The only problem is they were billing a three year old address for 9 months. The put in the charge off and sent it to an outside collections agency.
The dispute form is easy to fill out but it can take a up to a month and a half to be removed. In my case they have to remove it or it is considered credit fraud. Also I suspect they were double billing because the Idaho state insurance fund was very interested in my bill. Luckily if you have a dispute letter and enough documentation to prove the charge is false then companies don't hold it against you when you apply for credit.
Also when you say immediately pay off the card, do you mean before the bill comes? If you do that the credit card company doesn't have a balance to report to the credit agency, thus they can't show you are making on time payments. You might as well be using a debit card.
If you have applied for credit at mulitple paces that can ding your credit. My buddy bought a house 3 weeks before me and when he bought his 2011 camero the car dealership ran his credit 5 times. That looks bad but he could explain it, it didn't make any sense but he could explain it.
I am far from an expert but these are just a few things that I learned via a crash course while buying a house. I did get the house, but had to put up 3.5% down payment.
The dispute form is easy to fill out but it can take a up to a month and a half to be removed. In my case they have to remove it or it is considered credit fraud. Also I suspect they were double billing because the Idaho state insurance fund was very interested in my bill. Luckily if you have a dispute letter and enough documentation to prove the charge is false then companies don't hold it against you when you apply for credit.
Also when you say immediately pay off the card, do you mean before the bill comes? If you do that the credit card company doesn't have a balance to report to the credit agency, thus they can't show you are making on time payments. You might as well be using a debit card.
If you have applied for credit at mulitple paces that can ding your credit. My buddy bought a house 3 weeks before me and when he bought his 2011 camero the car dealership ran his credit 5 times. That looks bad but he could explain it, it didn't make any sense but he could explain it.
I am far from an expert but these are just a few things that I learned via a crash course while buying a house. I did get the house, but had to put up 3.5% down payment.
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go to www.annualcreditreport.com and request your once-a-year FREE report from all the agencies (they are required to provide this by law) and look at it. It will NOT tell you your actual score, but it will provide all the information that effects it from all three major agencies. Not freecreditreport (because it's not really free and it's a commercial enterprise).
Several things could have effected it.
- Have you gotten a new card, recently applied for any kind of credit (which would have caused a check), or even cancelled a card? New credit always lowers your score over a long-standing account. I have a couple of cards that I'd like to close and open elsewhere (for the benefits), but I keep them open with a zero balance because that would lower my score. I make a charge every once in awhile and pay them off just to keep them open.
- Avalable credit vs. acutally used: Did you close some cards/accounts?: The ratio of available credit to actual balances has an effect. Even if you pay of all your balances, if you closed one, you lowered the 'available' side and that changes the ratio which changes your score.
I pull my free reports every year just to take a look at what is being reported. If I spot something incorrect, I immediately report/challenge it.
Remember that many people have had lowered scores, and anyone granting credit knows that also. Another is don't be a slave to your credit score, as it's unimportant if you can become, over-time, self-financed. My credit score doesnt' matter much to me anymore because I got myself pretty much debt-free about 2 years ago, I have a couple of cards but pay the balance in full every month (i've never paid an interest charge in my life) just to keep something on the report. It will free your life. www.daveramsey.com
Several things could have effected it.
- Have you gotten a new card, recently applied for any kind of credit (which would have caused a check), or even cancelled a card? New credit always lowers your score over a long-standing account. I have a couple of cards that I'd like to close and open elsewhere (for the benefits), but I keep them open with a zero balance because that would lower my score. I make a charge every once in awhile and pay them off just to keep them open.
- Avalable credit vs. acutally used: Did you close some cards/accounts?: The ratio of available credit to actual balances has an effect. Even if you pay of all your balances, if you closed one, you lowered the 'available' side and that changes the ratio which changes your score.
I pull my free reports every year just to take a look at what is being reported. If I spot something incorrect, I immediately report/challenge it.
Remember that many people have had lowered scores, and anyone granting credit knows that also. Another is don't be a slave to your credit score, as it's unimportant if you can become, over-time, self-financed. My credit score doesnt' matter much to me anymore because I got myself pretty much debt-free about 2 years ago, I have a couple of cards but pay the balance in full every month (i've never paid an interest charge in my life) just to keep something on the report. It will free your life. www.daveramsey.com
Skydiver makes some good points. If you have some "no limit" cards like American Express and you are at the highest they have ever been on that card it makes it makes it look like that card is maxed out. If you have payed it down then they use your highest balance as an arbitrary limit on that card when they are calculating the available credit vs. used credit. Also if your credit card limit has been raised that can have an effect on your score. In extreme circumstances it can make you look like you have too much credit.
I also like the Dave Ramsey way of financing. I just started my self and I think I will be debt free (except for the house) in 2 1/2 years if all goes to plan. Then again in battle the first casualty is the battle plan.
I kissed all my credit card good bye when bank of America said, "Oh by the way we are raising you interest rate to 27.9% because we can. If you don't want us to raise your interest rate you must notify us in writing with in 10 days (4 had passed while the card was mailed).
I then started to save for anything I needed (except the bike, but that is used as collateral to get a better interest rate). The down side is I had to come up with alternate ways to show I could handle credit.
I also like the Dave Ramsey way of financing. I just started my self and I think I will be debt free (except for the house) in 2 1/2 years if all goes to plan. Then again in battle the first casualty is the battle plan.
I kissed all my credit card good bye when bank of America said, "Oh by the way we are raising you interest rate to 27.9% because we can. If you don't want us to raise your interest rate you must notify us in writing with in 10 days (4 had passed while the card was mailed).
I then started to save for anything I needed (except the bike, but that is used as collateral to get a better interest rate). The down side is I had to come up with alternate ways to show I could handle credit.
Thanks guys that's more info than I expected. I'll definitely have to pull up a report to figure out what's going on. I've never been in debt and never had a late payment. I started off with only one card and then for whatever reason decided to get another (rewards possibly?). I stopped using my first card and have been using the second since getting it a while back. I might as well just ditch that and stick with the one I use. I guess I'll check out the report and go from there.
GNBRETT
Registered
just remember having available credit can bring down ur score as well even if ur not using it. so yea lose the cards ur not using. its like when u apply for a loan it will drop ur score down cause creditors dont know if u actually got that loan or not. that is a hard inquiry. checking ur credit score on line would be a soft inquiry and wont hurt ur credit score
not much different then having available credit with multible credit cards when a creditor runs ur credit for a credit check for a given loan. u may not be using them but the money is there for u to use which could cause ur debt to income to become high if u were approved.
often ur credit score is wrong and sometimes someone with the same or similar name as u can cause an error. my buddy father screwed his up terribly cause they had the same name and same address. especially if u have a relative with a similar name and it may not be ur father. and of course there is the likelyhood that someone stole ur identity and has been using ur name to apply for loans and not paying for them. that is usally the cause of someones credit score falling like urs has over the last year
not much different then having available credit with multible credit cards when a creditor runs ur credit for a credit check for a given loan. u may not be using them but the money is there for u to use which could cause ur debt to income to become high if u were approved.
often ur credit score is wrong and sometimes someone with the same or similar name as u can cause an error. my buddy father screwed his up terribly cause they had the same name and same address. especially if u have a relative with a similar name and it may not be ur father. and of course there is the likelyhood that someone stole ur identity and has been using ur name to apply for loans and not paying for them. that is usally the cause of someones credit score falling like urs has over the last year
Very good points - besides missing payment/late payments - two of the biggest drags on credit ratings are available credit to income ratio and the length of time you have had good/bad credit... Generally 10 years of good credit begins to get you higher scores but to get the highest scores you need credit records for 20 years even thought they don't show on your credit ratings. Also, high revoling credit lines even if not used can be considered bad compared to installment loans i.e. car motorcycle house loans etc. the primary reason is installment loans are generally secured loans.
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