Interesting credit score nuance

[Russ Smith]

Got a note my score had gone down 10 points. Had no clue why so I logged in and looked. I paid my taxes this year by credit card because even with the % the IRS charges it worked out to my benefit because of the points on my card. So my 4K tax payment went on my card. The explanation for my 10 point drop was your available credit dropped 4K and your ratio of debt went from 2% to 15%. Note. I paid it off literally the minute it hit my credit card. In the whole scheme 818 instead of 828 doesn't hurt me that much but you just know it's not going back up to 828 instantly when they realize it's already paid off. Moral of that story I guess is don't fall in love with points on cards, had I just paid from my bank account my score wouldn't have moved.

My GF's score dropped about 25 points recently we couldn't figure out why until we got a letter from a lawyer for collections. The company that handles her test kits for a medicine she takes had taken her to collections over $1000 they never billed her because even though they'd been sending her test supplies to our current address since 2018, they hadn't updated the billing address and were billing an old address. They had all her information including her call number but never called. When we called them they basically said oh well, should have changed your address, we did, you're sending my supplies to the correct address, well supplies and billing are separate. So we had to pay the collection who promised to do what they have to do to immediately knock if off her credit report but again the score won't come back up immediately. The company also promised to send a note to the credit score people that the past due was paid but that of course doesn't help at all. Further annoying was she found a 2019 invoice she'd paid which means they had her correct address all along they just had some issue in their AP data that resulted in them billing an old address.

 

[BigRedRage]

I wouldnt worry about it and continue to take advantage of points. The score will bounce right back. Scores can go up and down daily but keep your focus on the big picture. If you are financially health, have good DTI and credit utilization overall, those small bumps won't matter in any way.

Medical debts tend to put in NO effort and just send you to collections. It's rather annoying.

 

[Russ Smith]

I wouldnt worry about it and continue to take advantage of points. The score will bounce right back. Scores can go up and down daily but keep your focus on the big picture. If you are financially health, have good DTI and credit utilization overall, those small bumps won't matter in any way.

Medical debts tend to put in NO effort and just send you to collections. It's rather annoying.

That's good to know I didn't think the score would go back up quickly based on past experience.

I don't really need it not about to buy a house or anything where it would benefit me but it was annoying I literally had that balance for 1 day, as soon as it posted to my card I paid it off but I guess it takes 2-3 days to fully process so maybe 4 days total with that balance.

The medical thing with Lucy was infuriating they have been sending her checks regularly they have payment issues so she winds up paying her insurance so the bill doesn't go past due, and then the test kit company sends her a check to pay for the portion that the insurance covered once they got billed. The delay is due to them billing insurance slowly. So during this 18 month period this bill was past due they have sent her well over 1000 in checks that they could have just kept because of the balance if they had bothered to pick up the phone and call.

 

[BigRedRage]

That's good to know I didn't think the score would go back up quickly based on past experience.

I don't really need it not about to buy a house or anything where it would benefit me but it was annoying I literally had that balance for 1 day, as soon as it posted to my card I paid it off but I guess it takes 2-3 days to fully process so maybe 4 days total with that balance.

The medical thing with Lucy was infuriating they have been sending her checks regularly they have payment issues so she winds up paying her insurance so the bill doesn't go past due, and then the test kit company sends her a check to pay for the portion that the insurance covered once they got billed. The delay is due to them billing insurance slowly. So during this 18 month period this bill was past due they have sent her well over 1000 in checks that they could have just kept because of the balance if they had bothered to pick up the phone and call.

If you watch your score daily, you will commonly see positive and negative impact from different transactions. Creditors only report to your credit once a month typically too so changes take a little time to show up. But yeah, if you just focus on big picture and stay financially healthy, everything will be fine.

Your primary components are:
DTI
Utilization
payment history

so if in two months, the DTI, utilization and history look the same as they did two months ago, there is no reason for it to change or go down. The one time the creditors reported higher balances will be long gone.

Another thing you can do is open a few more cards to increase your credit availability. This will make utilization be impacted less. Doing hard inquiries and opening cards can draw the score down temporarily too but then in the big picture, 4k will mean less utilization than it does today. I typically open one per year, either while making a big purchase to take advantage of % off or points or something. Otherwise, if I made no purchases, I just open one randomly and then never use them. I have over 20 cards and only use one. This keeps my utilization super low. In general, the one card I use, it often reports balances between 1k and 4k because I use it for everything I do but I pay it off in full each and every pay day so I never pay a dime in interest and everything works out in the big picture.

Remember, your score is just what opens doors for you, what is behind the curtain is how decisions are actually made. If everything behind the score is in great health, you are good to go.

Big picture only with credit.

Example: my score is "down 21 points" right now from a refi. In three months, I bet it will be higher than it was before the refi as that move has no negative bearing on me. This is based on credit karma which isnt a real score anyway. Also, depending on what you apply for, you have LOTs of scores. You have an insurance score, a home score, an auto score. What you get shown is not the same thing banks will see.

 

[elindholm]

Is there ever a case where an 800 credit score isn't adequately high?

 

[BigRedRage]

Is there ever a case where an 800 credit score isn't adequately high?

Only if behind the curtain things are a mess. Otherwise, its a golden ticket.

 

[Russ Smith]

FYI you were correct, got a new score update today it's back to 828

 

[BigRedRage]

FYI you were correct, got a new score update today it's back to 828

I wouldnt worry. Keep your bills paid, keep your financials comfortable and secure, keep money in savings and keep your debt low and it will always be more than good enough to do anything you need to do at this point. The only things that will truly bring it down is if you start becoming strapped financially by increasing debt, reducing cash flow and struggling with the bills.