Fico Scores Dropping Like Flies!
on jan 23rd my fico was 722,731,747.
then i bought a second home. with my good credit, i got
95% financing.
i recently bought a new primary residence and when the
broker checked my scores he pulled up 631,686,702.
the only thing that had changed was the number of inquiries and i opened a gap card, electricity and bought a cellphone.
i have NO late payments and my debt ratio is 54%(according to experian where my score is lowest)
what happened and how do i fix it???
inquires can drop your credit scores significantly. Another contributing factor is that you just opened two mortgages. Naturally they show up as with high balaces comparing to the credit limits. So, it looks like you are maxed out as far as those two mortgages are concerned. You credit reports do not know what your LTV's were when you got the mortgages, but they know your credit limit and what you owe now.
I guess what you can do now is do nothing. Don't open up new credit cards, installment, or any other debts for about six months, and then your credit should improve. How much? I don't know, but it should be at least 20, 30, even 40 points.
I would be willing to bet that the mortage broker shows many inquiries. Mortage credit inquiries are not going to drop your score " significantly" as above states each single one subtracts about 2.5 points. Your score changes every day. If you opened any accounts with a finance company recently that will take you down some 7+ points- wondering if you bought anything advertised as no payments for three months- Get copy of old report and new one ( don't let anyone run the credit again) I believe you are missing some of the balance differences. Look at your unsecured debts ie: credit card balances. One easy way to improve your score is this: look at your credit cards on the credit report NEVER go above 73% of the available line - always keep the monthly balance below that number. This will improve your score as it appears that you are not
maxed out. Time heals credit so just keep paying your bills as you obviously have always been good, and the scores will go up. If you need help reading the report let me know
hmmm....my credit card bills in february were about $7,500 which i paid off in march. maybe that what brought the scores down. the fact that they weren't shown as paid off by the time the scores were pulled.
but apart from that my open credit card lines are over 20K.
(and between 2 and 6 years old).
so even at $8K it should be below the 50% ratio.
the credit card companies should have reported march's payments by now, so i guess i'll pull my scores again and see if they've changed.
shouldn't have gotten the gap www.card.thought the wife was going to spend $350 on clothing and a 20% discount was worth it, but she ended on giving half the clothes back.
so i ended up saving maybe $20 .
No don't run it again. look at each individual credit card account not the overall available line-- say your xvisa card line available is $8100.- that particular one never have a balance over $5900. and so on for each seperate account. I believe the Gap may use a "finance company" Let me explain- Household Finance, for example services credit for may store cards and just having that type of account hits the score a negative 5.5. Look at each creditor and if is an unsecured visa/ mastercard those are a neutral type of account. OK?
[ Edited by classimg on Date 04/21/2004 ]
ps credit reports always show information about 40/45 days prior
niravmd, I feel your pain. I bought my first rehab which I have used credit cards to finance the supplies. Also just refinanced from hard money . My score has gone from a 728 to a 674 in 3 months with 2 of the 3 cards having 80% of the high limit used ,about 11000 total, the third is empty. I am now trying to buy several cash flow properties and am worried about financing. I plan on paying one off tomorrow but still am concerned about being overextended.
Very glad you brought up this topic and glad to see many replies.
Bri
thanks all.
i was planning on buying 4 properties with 5% down based on my 720+ score, but that idea is totally shot. i guess i'll
just have to sit on my thumbs for a few months while this clears up.
is the www.myfico.com 3 bureau score that same scores the lenders get???
I'm kinda in the same boat - the inquiries do count. None of my cards is over 50%, overal debt/limit is just under 30%. I started out with scores of 720 - 740, now Equifax is 693, the others are barely over 700. Balances are going down, no new lines of credit - just the inquiries.
BTW, you can dispute inquiries where there is no corresponding credit line. I did, got a letter and updated report saying they had deleted (brokers who pulled credit even though I gave them a current copy of my report and asked them not to). However, the inquiries are still there and still being counted.
Experian takes a hard line, but will sometimes delete them, TU is even harder. Don't ever dispute inquiries where you have a credit line - it may get you a fraud alert on your file.
An antidote and FICO-raiser is to pay down balances. Don't close accounts (despite what all the credit websites say) , even if you just charge some little thing on each account to keep it active. Scores measure average age of accounts - so keep that card you just got. However, most of the time, the % discount you get with those retail cards is not worth the FICO points. Let wifey get her own card.
Another technique to raise scores is to increase the debt to limit ration by having current card companies increase credit lines without inquiries. Citi just gave me a $1,500 increase with no inquiry. That should help when it hits my report.
It definitely limits what we can do with our personal credit.
Does anyone know if you req a credit increase on an existing acct will count as a new inquiry which will negatively affect your score?
BTW, this is my first post. I'm glad I found this forum...
I am a finance manager at an auto dealer. The reason for that is probably because lenders went to what is called a beacon 5.0 around the 2nd week of June 2004. I had customers that came in and had purchased withing days. However, I had to increase their rate based on the new 5.0 score as opposed to the former beacon 96 score. There is no real method but it seems that it is causing almost everyone's scores to drop significantly. Hope that helps
1. I don't know what the person that said keep your utilization below 73% is smoking. If you have $20,000 available and $8500 on one card. You are over 50% on that card and close to it for all lines. This WILL tank your scores.
2. Here is a link to how the CRA's are again screwing us over with a different score than FICO and which we are NOT allowed to see. I'm sure that this new scoring model is in response to the Federal law requiring the CRA's to provide one free report AND score once a year. Now, you'll get you free score, but because it is not the same one your lender will see, it does you no good.
http://www.fairisaac.com/fairisaac/images/images_viewpoints/july2002/nextgenfaq.pdf
If you have a HELOC as a 2nd ( you mentioned a 95% LTV - is that an 80/15 with a HELOC 2nd?) then it counts as a maxxed out revolving account. Not good.
Also to answer your question about myfico - no the scores are not the same. Mine are considerably higher on myfico than on my personal mortgage app.
how is 8500 outstanding on a 20K line > 50% ?
then what is the purpose of paying myfico for a "real" fico score?
i've paid off all my credit cards every month. my credit limit on all cards is about 25K. my have 2 helocs one of which is almost maxed out at 54K/60K and the other is totalled maxed out at 20K. after the i got the second one for 20K, thats when my score decreased. i have a 3rd one thats only 5K/50K so its 10% used thats 1 yr old.
i'm selling of the condo with teh 54/60K heloc. hopefully the score will rise after that. currently my scores are 630,668,710. i have NO negative remarks on my credit report. after i sell m y condo, i'll let u know what happens.