Your Credit Score is 100+ points less than FICO8. Why?!

Your Credit Score is 100+ points less than FICO8. Why?!
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#1

November 2018, I had 2 cards and $6,000 in credit card lines with 0% utilization. I put $42,000 through those two cards in 2018 and paid them off as soon as I put the charge on them. In June 2019, I have 35 credit cards with $108,957 in credit card lines. I have put almost $20,000 through them all using a new card each day, in 2019, and still pay them off as soon as i charge on them. I maintain 0% utilization every month at bill time. In the past 2 years, I have only paid $50 in interest fees. Why is my credit score 625 with you, and 740 with Fico8?! Inquiries are only 10% of 850, or 85 points max.


#2

Hi @tpask8r, thanks for the details, that helps narrow things down.

Some variation is no doubt due to the credit scoring model used and the credit report data it’s applied to. NerdWallet uses the VantageScore 3.0 model and applies it to your TransUnion credit report. VantageScore and FICO consider much the same credit scoring factors, with some differences in how they weight them.

Usually the big factors swaying a score are payment history and credit utilization. Clearly, you have mastered credit utilization! And I’m betting if you had a missed payment depressing your score you’d have mentioned that.

So, that narrows it down to inquiries and age of accounts. You note you’ve gone from 2 credit cards late last year to 35 now. That means a lot of hard inquiries and a big hit on average age of accounts.

As you note, FICO says inquiries count for 10% of its scoring algorithm, while length of credit history is 15%. VantageScore, on the other hand, says inquiries are “less influential” while type and duration of credit is “highly influential.”

I’m betting that your VantageScore is reacting to those two things:

  • Lots of new accounts diluted the overall average age of your credit accounts.
  • A flurry of applications in a short period can be interpreted as a signal of financial instability. Doesn’t sound like that describes you — but the algorithm can’t necessarily distinguish someone opening several accounts to optimize rewards vs. someone who’s stacking up debt.

The effect of inquiries is usually short-lived; they fall off your credit report at 2 years but stop affecting your score much sooner than that.

Your case would be interesting to follow because of the number of inquiries. Do you see a rebound in 3 to 6 months? That is usually the case with a few inquiries, but how does your VantageScore handle a big batch of inquiries? How much of a rebound will you see as the inquiries fade but your average age of accounts remains low?

I hope you’ll let us know! Thanks for sharing your situation, it’s really interesting stuff!


#3

Thank you for taking time out of your busy day to help me understand. This game makes no sense to me, and is the reason I dropped out of the credit world for 9 years. I thought I would stick it to the FED by bypassing all credit and only using Amscot money orders. It was a pain, but I was happy to be a rebel for 9 years, until I wanted to build onto my house and apply for a mortgage. I was told I shouldn’t even apply for a mortgage until my credit score was 740. I rejoined the credit world June 2017 with two $500 secured credit cards, and started over like a high school graduate. I went from Amex Clear, Amex Blue, Amex Gold, Amex Platinum in 2008, to only being able to get secured credit cards in 2017. It has been grueling. My student loans give me my oldest credit account at 17 years 9 months. With all my new cards, my average credit age is 9 months. I will not make the mistake of closing everything in anger again and will leave all of these accounts open until I die, even if I don’t use them, to establish a high average age.

To answer your questions, I have no late pays in 5 years. Once I hit 20 inquiries, my score stayed the same no matter what I apply for. I apply every couple weeks from each bank either for increase, or new card. I just got declined for all my banks and cards in May for too many inquiries. I know credit scores are refreshed at the end of every month, so yesterday I tried again with 28 inquiries, and got approved for:

  • new Amex Blue $4000 line
  • increase on Ebay Mastercard from $1500 to $4000 (SYNCB)
  • new Walmart $1200 line (SYNCB)
  • new Amazon Store line $300 (SYNCB)

I tried all my other cards and banks and they all declined me. I will try again in July. July is 6 months since my last credit line increases for Discover, Citi x 2, Capital One x 2, and my other two Amex. I will wait a few months and try all my Comenity Bank Store cards again. My new goal is $200,000 in credit card lines, an 850 score, and 50 credit card lines. I don’t need any of this, and would be just as happy going back to cash only like I did for 9 years, but I want to beat them at their own game. Being cash only for so long taught me to only spend what I had in my pocket/bank account. I never charge more than $1000 without immediately paying it off through Bill Pay. Usually my payment beats the temporary charge becoming permanent. For awhile, I was keeping a $100 credit balance on all of my cards and I would always use Bill Pay to pay it back to that $100 credit everytime I charged. It is all just a game, but a game with no logic. I should have the highest credit score in the country for going 9 years only spending what was in my pocket and never using credit. Instead, I am treated as less than worthy for years begging for credit lines I don’t need. With all of my intense, and responsible credit card habits, I am still at 625 with you, and 740 with Fico8. It makes zero sense to me. Again, thanks for your time, and response. I really appreciate you!


#4

One more thing to note, in April, my credit score was 717, so I decided to apply for a mortgage prequal through BOA. They offered me a mortgage for 3x my salary for a 30 year fixed at 3.95%. My current mortgage is $3.875. I don’t know a single person with a mortgage rate lower than mine, yet they are giving me a fraction of a percent higher with a 717 credit score, not a 740 credit score. I realized then that I have already got my credit score to an acceptable mortgage rate level, so my journey is now over. I guess I can still go for my next steps I listed above. I have to share, psychologically, that every new card and increase felt amazing for a day, then went back to not feeling anything. Each $10k level felt the same way. I realize that it is only the anticipation of the next reward that is the real prize for this game. It truly shows that no matter how much you have, you always want more, even if you are pleasantly happy with what you already have. I was on cloud 9 yesterday after getting 3 more rewards. Today, it doesn’t make a difference if throw them all in my SDB and never look at, or use, them again, and go back to cash only. It is a funny thing, human emotion.


#5

Hey, thanks for this additional info! Yes, I agree, credit scoring can seem like a giant mystery.

Here’s a way to look at it: Credit scores don’t exist to say that you are managing your cash well. They exist to tell lenders how well you manage existing credit, so they have a good idea of whether you’d repay a new credit line should they choose to grant you one.

So, all those years where you were cash-only and managing your money very closely? They don’t help lenders understand how risky you are to lend to, because you weren’t using credit at all (other than student loans).

It’s not uncommon for people who choose to go cash-only to become “credit invisible” — they don’t have enough recent credit activity in their reports to base a score on. And you’re right, then it’s like you’re starting all over as a newbie … but you can indeed build back up from a thin credit file.

If your mission is to get a perfect 850 credit score, consider halting applications for new credit or higher limits. You have tons of available credit, at $108,957 in credit card lines, so that gives you great flexibility in keeping utilization low and still having a cushion if an emergency expense pops up.

You could more efficiently improve your profile by:

  • Continuing with your impeccable payment history (a huge factor in both FICO and VantageScore).
  • Sticking with your habit of keeping utilization extremely low (the second-biggest factor).
  • And letting existing accounts age nicely.

You have the major elements already in place — and you’re right, there’s no need to carry even a small balance on cards to have a good score. Paying in full every month is the absolute best; you get credit for your responsible credit usage and don’t have to pay interest!


#6

@khinson gave you the straight scoop, @tpask8r! This really stood out to me:

so yesterday I tried again with 28 inquiries

We normally recommend people wait a few months between inquiries, and not to add or close accounts in the months before they apply for a major loan like a mortgage.


#7

I know that is what everybody says, but I had 20 inquiries in January, and have added over $43,000 to my credit line through new cards after 20 inquiries, so I am living proof that common advice is not accurate. I will keep updating here, with your permission, every increase and new line I get and the number of inquiries I have at the time. in addition, I had over 25 inquiries, and 30 cards, when I applied for a mortgage prequal from BOA, and they approved me for 3x my salary at 3.95% 30 year fixed.


#8

“November 2018, I had 2 cards - In June 2019, I have 35 credit cards”

How in the world does anyone add 33 credit cards in 7 months? And who in the world would want to? Strangest thing I have ever heard.


#9

That’s a great interest rate, @tpask8r! The thing with credit scores is that everybody’s mileage varies. The formulas are multivariate (the interplay of factors can be different, based on the info in your credit reports) and the different scores and generations of those scores can react differently. A FICO 8 can behave differently than a FICO Bankcard 8 (or a FICO Auto Score 8, or FICO 4, or a VantageScore 3). Some will be more sensitive to inquiries, some less, and the impact for many will depend on how many and what type of credit accounts you already have in your credit reports.

Also, mortgage lenders don’t use FICO 8s or VantageScore 3s…they typically use much older versions of the FICO formula that can be dramatically different from the scores you see elsewhere. Those mortgage scores aren’t available anywhere for free that I know of, but you can purchase the 5-6 most commonly used scores for each bureau, including mortgage scores, from MyFico.com.


#10

Thanks for explaining that! Everything you explained puts it in a better perspective for me to understand.

wleach313, I cannot explain why or how. As I explained earlier, I don’t understand how this all works. I was born to think outside of the box and push boundaries, so that is what I have done here. You ask why? I don’t have an answer except why not? I do have to keep an excel with formulas to help me keep track of everything. I check all the balances every Weds and payday and update the spreadsheet accordingly. The spreadsheet calculates what percentage I am at and tells me how much I can put on each card to stay under 10% utilization. When I put anything in my PAID column, it deducts from the disposable balance automatically so I can see what I have left in that main checking account for bills. This way I never overpay my balance when I pay the charge as soon as I get in my car. I use a different card everyday so they will all show a payment made at the end of the cycle.


#11

Great information here, thank you very much. Obviously the credit score algorithum does not “see” nor relate the credit utilization with the credit inquires. If it did then it would make no point in declining credit increases or new credit lines issued. If there is 0% credit utilization then the risk to issue new credit increases or new credit lines should be very low indeed. Another factor of course, a big one, that is not mentioned, is the declared income. The banks are not going to continue issuing credit or increases forever.

Another point is that if you do not use your credit cards for over a year then many will start to be declined later and closed by the issuer. I assume all of the credit cards are NO FEE cards; no annual fee. Correct?

It would be of great service to me and others if you would list your issuers (Chase, BOA, Citi, etc.) and WHICH credit bureau(s) each used before issuing you credit. Thanks again and best wishes.

BTW; I dropped out in 1992 (as a homebuilder) when I found out about the private nature of the FED and how interested is created and how the USD is created out of thin air (no backing, no intrinsic value). I restarted in the banking in 2017 with no credit file at all. That is very difficult to do. I was invisible for 25 years; no bank account and no bank credit. I have now over six credit cards, all 0% APR for xxx months and balance transfers (pay no interest). I have used no secured card. I have $40,000 in credit card lines and a declared income of $89,000. No drivers license, No alimony, No public inquiries (bad marks), I pay a few days early every month, a little over the minimum, and I am carrying 60% utilization; until the balance transfer comes due. I will pay each credit card off to $0. YES, my FICO dumped for three months but now it is back over 720. No new credit since 2018, no new inquires either; 4 still on file with two bureaus, two inquires on the other. This new credit fling has been an experiment. I will use a different approach in 2020 and I may use this experiment as part of a thesis soon, as I am considering getting a degree, I am 70 years young. I am interested in alternative economy and Crypto currency also.


#12

Applied for a bunch of new cards on the day of my last post and all were declined for too many inquiries.

Today, Credit Karma let me know of an automatic increase with target (commenity). I decided to call two other low cards with commenity and the IVRU granted an increase. Will try my other commenity cards later tonight for an increase. None of this makes sense.

32 credit inquiries.

Target: was $500, now $1000
Pottery Barn: was $250, now $2250
Pier1: was $350, now $1850

Increase today with 32 inquiries: $4000


#13

Thanks for the updates @tpask8r!

Here’s what I want to know (only if you feel comfortable sharing!): What is your VantageScore now, and what is your FICO? Do you see additional dings from the repeated hard inquiries?

If you were to suspend your inquiries for some months, how would your scores react — and how fast?

Credit scoring is a really fascinating subject, and it’s interesting to see individual case studies like yours — thanks for sharing!

Although I had earlier said you have plenty of available credit, the nice thing about the three increases you note here is they gave you some “room” on retailer cards. One of the things to watch out for on a store credit card is they tend to have low limits, so it’s very easy to go over the recommended 30% utilization max with just a few purchases. (They also tend to have higher APRs, so if you carry a balance you’re racking up some interest costs. Not an issue for you, though, since you pay cards off immediately.)


#14

Today:

HSBC increase: DECLINED
Discover increase: DECLINED
Home Depot increase: DECLINED

35 inquiries

Lowes increase: $12,000 -> $15,000

Total yesterday and today with 32-35 inquiries: $7,000

Fico8 = 714
Credit Karma = 622
Nerd Wallet: 622

New Total Credit Limit: $115,957
New Total Balances which will all be paid off when I get paid tomorrow: $1165.84

July 1, my CapOne Simplicity card has 6 on-time monthly payments, so credit line increases from $3000 to $3500. On my CapOne Quicksilver, they jumped me from $750 to $3750 after 6 months. Hopefully, I can convince them to double my $3000 Simplicity credit line, instead of giving me only a $500 increase. They have a 2 year history of me paying off all of my purchases to $0 each paycheck. We shall see.

This feels like gambling, but when I lose, I lose nothing. Of course, when I win, I win nothing, too, as it is not my money. I guess it is the feeling of winning other people’s money. Although it is fun, I don’t need it and would give it all up. I would just request they leave me with my favorite, beautiful card: The Amex Cash Magnet card with a $1000 line.

It reminds me of my favorite bar:


#15

Agree with @khinson. Experiment is fun to watch. (You may be comparing scores from different credit bureaus, though. The NerdWallet score is a VantageScore 3.0, based on data from TransUnion. My scores vary a bit, depending on the credit bureau providing the information (and, of course, the scoring model). VantageScore 3.0 does generally take off more points per hard inquiry than FICO does, and your experience seems to support that.

Thanks for sharing.


#16

Credit Karma says it also uses Vantage 3.0 for Equifax and Transunion.


#17

Thanks for sharing your scores and process, @tpask8r!

One thing caught my eye, you said: “This feels like gambling … I guess it is the feeling of winning other people’s money.”

I’m absolutely sure you know this, just judging from how on top of payments you are (that spreadsheet! :heart_eyes: ), but for others watching the conversation let me say: Credit lines aren’t other people’s money, they simply represent the ability for you to spend money upfront that you will have to pay back in the future. So, it’s more like “renting” other people’s money, and if you can’t pay in full on the first billing cycle the rent you pay is interest.

I just don’t want any credit newbies to get the wrong idea. I’m not saying it’s a bad thing to have plenty of available credit — especially if it’s at a reasonable APR or if, like @tpask8r, you pay it off as you go (that’s ideal).

You said earlier you’re aiming for 50 cards and $200,000 in total credit lines — that will conflict with your other goal of hitting an 850 credit score. Once you get to 50 cards / $200,000 total credit line, you’d need to let all those accounts age for some time to break into the 800s I imagine.

The key thing is understanding the factors that affect your credit score. All the elements are interrelated, so working on one factor will also affect others. I tend to make a game out of trying to get as close to 850 as possible — but my new mortgage set me back a bit with several hard inquiries spaced out just a bit too far apart, a lower average age of accounts and higher total balances. Oh well, I wanted the new house more than I wanted to keep my 831 score. And, my efforts to bump up my score meant I got a good interest rate, so it served its purpose!


#18

My Mint VantageScore credit score is 573 using TU.