Credit score drop but why?

[reptile411]

So I have a house, car, MC and a lowes card. Never late, rarely use cards, extra payments on house and car every month. I checked my report yesterday and my score across the board dropped about 3 points. My MC usually has a 0 balance but when the report came around this time I had and it showed only a $390 balance. Would/should that balance be what caused it to drop?

[Seeker]

Originally Posted by reptile411

So I have a house, car, MC and a lowes card. Never late, rarely use cards, extra payments on house and car every month. I checked my report yesterday and my score across the board dropped about 3 points. My MC usually has a 0 balance but when the report came around this time I had and it showed only a $390 balance. Would/should that balance be what caused it to drop?

A $390 charge will not drop your score unless:
1) Your max limit on that CC is pretty near that $390.
2) it's past due.

It does not sound like either of those cases are true.... but we'd not know why either.

Have you been making applications for more CCs? Or any other kind of loan? Those could drop your score. How often do you "get" your score?

If you're making payments on time and have a house and car and the $390 charge is yours, then you should not have to worry about your credit score. A couple of points less it not really going to hurt you at this point.

The three major companies that quantify, do so differently. They could be measuring any number of things.

[reptile411]

My MC limit is 700. I am never late on anything. I do not apply for CC. The last hit on my report was from my mortgage back in 10-08 when we got the house. I get my report and score every month as part of a service for &9.95 attached to my MC account. I like to keep an eye on it which is why i pay for the service. I know 3 points is not a lot but I have worked very very hard to have good credit "I'm sure a lot of you can relate" It took several months just to make those 3 points which is why i don't understand why they drooped off so fast. The only other thing is my lender for the house transferred my loan to Chase but that was 3 months ago so it dosnt explain the 3 month delay so I don't think that was it. We are looking at buying some rental properties right now but we have a private broker that has yet to look at our credit so it would not be that. I'm just at a loss as to why it went down when its been on a steady upward trend all this time.

[b4freedom]

There are several reasons why your credit score dropped:

1) Your credit limit is $700 and you are using $360 of it. This means you’re using up more then half of your available credit limit. This will make you a higher risk. However, $700 is a really low credit limit. If I were you I’d find a better card with a higher limit. I hope you’re not paying fees on this.
2) You did nothing. People believe that credit scores are a reflection of their actions. Although this is true, it is not completely true. Credit reporting companies use statistical modeling to determine social behavior. A high score means that your risk is lower. A low score means that your risk is higher. But, how do they determine your risk? They lump you into a group of people who are similar to you based on many many factors. Then, they analyze that group based on behaviors. If they see that certain behaviors within a certain group leads to certain specific outcomes then they ASSUME that if you do the same behavior the same outcome will result. For example, let’s say that you’re lumped into demographic group A. If 70% of the people in demographic group A suddenly use up 50% of their available credit and then 3 months later they default on that credit the company will assume that if you suddenly use up 50% of your available credit then you have a 70% chance of defaulting as well. They then adjust your credit score to reflect this new chance of default. But, it gets worse. Let’s assume that you’ve been a great person and suddenly you don’t match the demographic group A profile. They will move you to a new demographic group and this could change your score because the rules for calculating your score will change based on your new group.
3) A change in a few points is meaningless in the credit score arena. Don’t sweat the small stuff. My credit score fluctuates anywhere from 780 to 835 depending on the cycle of the moon. You just want to keep your credit score in a targeted range.
4) Stop paying for credit monitoring service. Keep your credit clean and check it once a year for free using annualcreditreport.com to make sure the information is accurate. Checking your credit score all of the time will only lead you to have ulcers.

[jsk]

If the ratio between the credit limit and balance is high or if you are not using your credit card, then the score can drop a little.

[Alex_Adviser]

Here are some possible causes that could be a cause for the drop in your credit score:
Credit Limit Lowered
Credit Usage Increased
Unpaid Bills / Late Payments
Applying for New Credit Cards