My credit score dropped almost 40 points for paying in full?!

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My credit score dropped almost 40 points for paying in full?!

Postby Okie21 » Thu Feb 09, 2012 9:03 pm

Credit score dropped from 671 to 629 (42 points) in less than 3 months (as reported by Equifax)

Newbie here, both on the forum and credit history. I got a (Cabela's) Visa Credit Card 13 months ago w/ a $500 credit limit and have used it pretty consistently since then, especially since August. I have paid IN FULL every month, NEVER made a late payment, and NEVER gone over my limit. I've only exceeded $200/mo in spending in four of the months since i've had it ($1997.58/yr 2011)

I have not had my credit pulled but one time since i've had the card, and no history of it being pulled much if any (ie.. not applying anywhere for credit or loans) before that.

I am early twenties and have 18k in student loans, which i am not yet liable to make monthly payments (just graduated). The one time it was pulled, it was for a limit increase that i didn't ask for or approve of (which is another issue). But after this was done, i got a piece of paper from Cabelas Visa/Bank dept saying i had been declined the increase, and it had my credit score as reported by Equifax. It said that as of 10-25-2011 i had a score of 671.

Last week i tried to rectify the issue of them pulling my credit for a limit increase i didn't ask for, and i asked if i was eligible for an increase now. The rep told me that i wouldn't be, b/c my score was too low, and she told me it was now a 629.

In less than three months, during which i made full payments, my score dropped from 671 to 629. I have yet to dispute this b/c i had no idea what credit utilization was till this week. Reviewing my spending during those three months, it was 50-75% of my limit. Is this enough to crush my score like that in three months, or am i getting screwed?

Also, I have been getting tons credit apps in the mail (Amex green twice, and gold once, chase freedom, citicard, etc) and many of these apps say something about my credit getting better and what not. I just received two more this week. Does this make sense to get these if my score is on the decline like that?

Any thoughts, facts, advice, and general sharing of knowledge would be great, b/c i need to know whether or not to dispute this. Thanks in advance, and sorry for the long post.

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Postby namvet » Fri Feb 10, 2012 12:48 am

Yes over 50% util will tank your score this much or more. Keep your balances down below 30% of your available credit. Your creditors report the balance on the statement date each month. You can charge it up between statements but make sure you pay it down when the creditor reports.

The offers you are getting in the mail are off a list purchased from the credit bureaus and usually are not current. Your credit score should rebound quickly when you pay down your cards. Also be careful about asking for credit line increase because hard pulls cause new inquires and they will drop your score as well.

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Postby hjamespyun » Fri Feb 10, 2012 8:30 am

I remember my credit score jumping up nearly 30 points when my utilization went from ~55% to ~25% within a month.

+1 what namvet said; you should be plenty fine, though I would recommend not jumping on any of the offers you are getting until you are closer to 700 territory.
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Postby ashleyAMX » Fri Feb 10, 2012 10:32 pm

yes, utilization is enough to tank your score. I don't carry more than 10% of my overall credit limit. But, to each his own.

keep lower utilization is easier if your limits are higher. i.e

10% for you would be 50$ versus if you're limit was 5,000 it would be 500$, etc. the balance that is on your card on the CLOSE DATE will report to the bureaus for that month. I would suggest you call and ask first.

"mr./ms ____ your close date is the 15th of every month"

if your balance on the 15th is 450$ then your utilization is 450/500 or 90%
if your balance on the 15th is 45$ then your utilization is 45/500 or 9%

This is why when people say they 'don't let balances report' it means to have 0$ as of the close date reporting.

hope this helps. get your balance down. util will hurt especially for young credit and few trade lines

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Postby frazell » Mon Feb 13, 2012 8:11 pm

As a recent graduate, class of 2010, I am sure your situation is similar to mine.

I have a ton of student loans and my credit score took a nose dive shortly after graduating. As for some reason the loans were not only no longer being reported, but they were deleted entirely. It wasn't until some time after the grace period expired that the loans started to appear again. Thankfully they also reported the same history as before (which helped account age and payment history).

You can verify this by checking your report. But I suspect this is the case.

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