Credit Score Dropped 60 Points In One Month For No Reason

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corsascuderia
 
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Credit Score Dropped 60 Points In One Month For No Reason

Postby corsascuderia » Tue Dec 17, 2013 9:52 am

Last July, I had a TransUnion score of 732 according to Credit Karma, which made me pretty confident in applying for an Amex gold card. It turns out that I was a little over-zealous with my application and I was denied on the grounds that according to Experian, I had no credit history.

At the time, I had only had a credit history of 5 months, and I guess when Amex tried to pull my history, their modeling service threw a 9003 reject code because I hadn't had any tradelines actively open for at least six months. My credit score promptly dropped to 673 when I checked it the next month on Credit Karma.

Considering that I held everything else constant (my util rate was 5%, no derogs, no other inquires) this seems a little extreme to me. I was under the impression that a hard inquiry should only lower your score by 5-10 points. Not 59. This is a bit of an issue for me because I just started up a new business and will be applying for a credit card with a personal guarantee.

I really would rather not aim for cards that will suit what is now mediocre credit. Any ideas why one inquiry dropped my score by so much? To what extent will this affect my ability to get credit for my business?


MemberSince99
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Postby MemberSince99 » Fri Dec 27, 2013 1:34 pm

Credit Karma is NOT a true FICO score - it's what's called a FAKO. No lender on the planet knows or cares what Credit Karma says your score is.


Also CK uses Transunion (TU) which you know, and Experian (EX) is a completely different credit bureau. It's like GM and Ford - they do the same thing but they are TOTALLY different companies. So just because CK says one thing about your credit, which it bases on what TU has, does NOT mean it's going to be the same on EX.


Ignore what CK says. Most of their advice is less than useless and their score is just a rough guess of what your FICO score (which lenders use) may say. CK says my score with them is like 728, but Barclay's says my FICO (real score) is 799. Do you think it bothers me that CK says my score is 71 points lower? Not at all. And that's not at all unusual either there is often a pretty big difference.


The only way you are going to know what shape you are in is to actually get your FICO scores and credit history from a paid source. In this case you want EX NOT TU since Amex pulls EX. Then you will be in better shape to determine how to proceed.


Generally you need 6 months of history before the bureaus will show your history BTW.

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Postby RewardHop » Fri Dec 27, 2013 3:41 pm

corsascuderia wrote:I was under the impression that a hard inquiry should only lower your score by 5-10 points. Not 59. This is a bit of an issue for me because I just started up a new business and will be applying for a credit card with a personal guarantee.


It depends, I think in your situation because you have such a thin credit file, it leads to a higher impact on your overall score.
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flan
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Postby flan » Fri Dec 27, 2013 11:37 pm

MemberSince99 wrote:The only way you are going to know what shape you are in is to actually get your FICO scores and credit history from a paid source. In this case you want EX NOT TU since Amex pulls EX. Then you will be in better shape to determine how to proceed.

.


Paying for a credit score is a sucker's game. You can't get the score anyone uses, so there's no point in paying for something that isn't that. Looking at your file is worth while, but since amex turned you down, you don't need to pay to get the file from experian. You just have to ask.

That said, with a five month history, you won't have a fico score, since they all require an open tradeline with a six month history. It's still worth looking at your experian file, to make sure it's accurate.

Unless you make a lot of money, amex isn't going to want to deal with you until you've got some real history, probably at least a year.

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Postby MemberSince99 » Sat Dec 28, 2013 7:27 am

Sure you can get the score they use - they HAVE to give it to you by law if you don't get the best terms. They may dress it up, but they all pretty much use FICO so getting your FICO score is worth it when you have questions about things like this.


I agree doing it too often is throwing money down the drain but saying it's a total waste is a crock. They all use the FICO score. They may do things with that internally but they all use it and it is a way better measuring stick than the FAKO offered by CK. It's not helpful to new people to go off on this esoterica it will just confuse them, though it surely does indicate a brilliant and penetrating mind to raise such questions....

flan
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Postby flan » Sat Dec 28, 2013 9:04 am

MemberSince99 wrote:Sure you can get the score they use - they HAVE to give it to you by law if you don't get the best terms. They may dress it up, but they all pretty much use FICO so getting your FICO score is worth it when you have questions about things like this.


You get one score they used; it's usual among sophisticated lenders to use a bunch. And they do not have to tell you exactly what it is. That is, saying it's a FICO score is enough; they don't have to say which model nor which version of that model. For a credit card, they're almost certainly using a bank card enhanced model, which you can't buy from anyone. You'll do much better to make sure your reports are accurate, that postive accounts are reporting, and working on getting rid negative information (and making sure there's none generated...), and managing utilization.

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Postby MemberSince99 » Sat Dec 28, 2013 3:51 pm

The FICO score still has value under some circumstances. For example if someone has a 630 on EX, I think it's safe to say it's PROBABLY going to be a wasted inquiry if they apply for Amex, regardless of what model or version Amex uses, wouldn't you agree?


You can get an idea of what cards you might qualify for by virtue of your score. And what cards you might get declined for.


Just looking at my info without the score, I can see I have no issues and good credit, but I have NO idea of where I stand. The score gives that.


Also when going for auto loans or a mortgage, I think it would be foolish to not know what your score is when dealing with your lenders.

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Postby takeshi » Sun Dec 29, 2013 7:59 pm

corsascuderia wrote:To what extent will this affect my ability to get credit for my business?

If one inquiry caused that drop then your thin file probably would have been a problem to begin with. Have you pulled all your reports to ensure that they're clean? It would be a good to have a known good starting point to get a handle on your credit with all 3 CRA's. Your call as to whether or not you want scores from myFICO as well.

Definitely do not operate based solely on your CK score in the future. First of all, it's only useful for monitoring trends over time. Second, CK is only based on your TU report. TU isn't used by all creditors.



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