I try to keep track of my credit score via credit karma and it's usually pretty good. I had purchased some stuff on Paypal credit, and credit karma told me to get the balance below 30% of the limit to help my score. So I did, and my credit score immediately dropped 67 points. That was the only change over the past month.
Why would paying it down drop my credit this much? I still have a balance, it's just a low balance. It didn't change the age of my credit history or anything either.
In reply to infinitenexus :
Multiple factors.
A) credit karma is a score simulator, it estimates your score
2) PayPal may not report every month like a secure card from a credit union, but quarterly like most major credit cards, or only when you berkeley up and don't pay, like cell phones and utilities
C) credit score is voodoo magic. People that are 33 TRILLION in debt shouldn't get to decide if you can borrow enough for a car oorhouse or to fill your gas tank, but they do anyway.
All true points. This change happened specifically after paypal reported the payment though, which is why I'm stumped. I'm sure my *actual* credit score (especially if I went to a credit union) would be better as it always has been in the past, but I'm still scratching my head as to why paying $350 on a credit card would tank my score 67 points.
It's the percentage of available credit vs credit used. If it's too high you "must be overspending" but if it's too low "you must not be able to control your spending so you don't spend" which make 0 sense.
If you use 50% of available, that's bad.
If you use 25% of available, that's perfect
If you use 15% of available that's bad
If you use 0% its worse than bad.
Those percentages are made up, but that is pretty much it. That payment took you below some "magic" percentage, when paying $300 would have kept you above that number and the score wouldn't change as much.
Why does that make sense? it doesn't to anyone except the people that make the rules
I'll also never understand why someone paying $2k a month for rent will not qualify for a $1500 house loan for some magic reason either
I love that individual purchasing power is so tightly regulated by an intangible number that no one can give you an exact formula for and there are multiple agencies that monitor it.
Also I love the advertisements that are like "download our credit monitoring app and instantly boost your credit score by 15 points!" just proving that it's all a sham.
DirtyBird222 said:I love that individual purchasing power is so tightly regulated by an intangible number that no one can give you an exact formula for and there are multiple agencies that monitor it.
Also I love the advertisements that are like "download our credit monitoring app and instantly boost your credit score by 15 points!" just proving that it's all a sham.
Oh, they can give you the exact formula. They just won't.
I had no credit card for probably 15 years and my credit score was nearly an 800. Bought a few things and put them on Paypal credit and it dropped a bit, which is understandable. Paid it down and boom, credit score down.
I guess the good news is that I have no need to take out a loan for quite some time, but it's still a bit frustrating.
It also has to do with when you pay. I have my Amazon card auto-debit from my bank account and I don't really have a choice of when it does it. They report last month's balance to Experian and I get monthly emails that say "Scores fluctuate and it's ok," then a week later I'll get something like an 8 point increase and an email that says "Whoa, look at those scores!"
It has nothing to do with the actual score. It is simply simulating my score based on the fact that it reported a balance on a card on the date it checked, then noticed the balance changed to zero and simulates a new score.
You're also in for a real eye-opener when you go to actually apply for credit for a home loan or finance a car... Credit Karma and others tend to pretty wildly inflate your actual numbers. My "real" score is about 25-30 points below what CK says.
You can pull your real score from the three places once a year. My have already been said.
My credit card, Capital One, gives me an update through their free Creditwise.
I know this was said: It is voodoo magic.
I destroyed my credit one time. I hope never again.
I use myfico.com. i used to use CK but this is def better in every way.
My score fluctuates wildly. January it was 810, February it was 675, and currently it's 808. February I had $20k on cards buying materials. March and April I had zero balances. Currently have a $3600 balance on one card and a $600 balance on another that I just paid off. It should drop again next month.
I mostly ignore it.
Curtis73 (Forum Supporter) said:You're also in for a real eye-opener when you go to actually apply for credit for a home loan or finance a car... Credit Karma and others tend to pretty wildly inflate your actual numbers. My "real" score is about 25-30 points below what CK says.
Funny you mention that. My FICO score is about 20 points higher than credit karma, lol.
My wife has been trying to get the credit agencies to move her credit score to her new name for over a year with no success.
We go to finance a new Honda Pilot. Six year unemployed wife's credit score is higher than employed guy.
Story is rarely use credit cards - I just pay off wifeys every month.
5 months later and it's still all over the place. Currently about 720.
I still mostly ignore it.
Mine bounces between 760 and 675. No idea why. Paying off cards seems to lower the score.
When going through my divorce I missed one card payment.
The balance was $1.62. Yes, one dollar and sixty two cents.
The card company reported a late payment to the credit union and dropped my score 50 points. It took almost a year to get the score back to where it was.
it's a bunch of crap. my score goes up 15 points every time my daughter's student loan makes another tuition payment. then it ratchets back down over the next few months.
Credit Karma (and others) are kinda like your electric bill. They usually don't take an actual meter reading every month, they do it every 3-4 months and estimte your bill based on previous years and adjust it for outside temperature and stuff.
CK looks at your actual score probably once a year (so it doesn't ping your numbers) and then monitors your activity to estimate what your numbers probably are.
None of this matters if you just pay cash for everything.......
Steve_Jones said:It's the percentage of available credit vs credit used. If it's too high you "must be overspending" but if it's too low "you must not be able to control your spending so you don't spend" which make 0 sense.
If you use 50% of available, that's bad.
If you use 25% of available, that's perfect
If you use 15% of available that's bad
If you use 0% its worse than bad.
Those percentages are made up, but that is pretty much it. That payment took you below some "magic" percentage, when paying $300 would have kept you above that number and the score wouldn't change as much.
Why does that make sense? it doesn't to anyone except the people that make the rules
I'll also never understand why someone paying $2k a month for rent will not qualify for a $1500 house loan for some magic reason either
I don't know if that's true about holding a balance. We have one card that we use for basically everything for reward points (I have a few others as well). Pay it off every month.
In the last 18 months, my credit score hasn't changed and the limit on that card has gone from $18k to $30k.
It runs on the same stuff that fills automatic transmissions and adjustable shocks: WITCHCRAFT.
MiniDave said:None of this matters if you just pay cash for everything.......
Paying cash is silly. With groceries/cleaning supplies/dog and cat food and litter so expensive, we probably spend $800-1000/month on that stuff.
If I use the credit card, not only do I get protections on the purchase, I automatically get 2% back of what I spend on EVERYTHING. $250 back at the end of the year just using a card instead of cash? And that doesn't count fuel, going out, booze, etc, that we also earn the points on.
In reply to MiniDave :
True, but paying cash for a house is outside of the realm of possibilities for a vast majority of people. My goal is to buy a house next year, so I need good credit.
The only revolving credit I have is my PayPal credit, which is essentially a credit card. I paid it mostly off about a week ago, and next paycheck I'll pay it off fully. I'm curious to see how that will affect my credit score. It should raise it, but who knows.
In reply to infinitenexus :
Have you shopped around other credit monitoring outside of CK?
I have credit cards with different companies, and all provide free credit monitoring on their app or website.
I never pay attention or worry about the score itself unless I'm in the market for a loan. Seeing as I'm not, and knock on wood don't see myself being in the market for one soon, I don't care what the score is. If I see a big dip or a big increase, I'll look closely at it to see if everything on there is indeed mine, but the score itself is inconsequential to me... unless I'm shopping for a loan.
Seeing as both the mortgage and the car loan are below 3%.... I won't be shopping anytime soon.
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