Cranky thoughts about my credit report

[kitty]

I was looking at my credit reports today on annualcreditreport.com because I got a new second "key factor" on my credit card's free FICO score. I'm apparently now old enough to no longer get dinged for length of credit history so now it says: #2 "Too few accounts currently paid as agreed" which says "FICO® Scores consider the number of accounts that are paid as agreed. Your score was impacted because the number of these accounts is too low, or because you've missed payments recently on some of your accounts."

I pulled the reports to make sure there weren't any accounts with missing payments (there weren't) so I guess the number of these accounts is too low. I have a mortgage and 3 credit cards (all paid in full monthly). However, Key Factor #1 is "Too many accounts with balances" which says "FICO® Scores consider the total number of accounts a consumer holds with balances, including credit card balance amounts that appear from the most recent account statements—even if that balance was paid off. Your score was impacted by having too many accounts with balances."

So I don't get how having 4 accounts that are all and have always been paid as agreed can have me simultaneously having too many accounts with balances and yet too few accounts currently paid as agreed? Has anyone else ever seen these two seemingly contradictory messages?

My second question is regarding my mortgage. When we purchased our house, we put 30% down to keep our mortgage lower even though we were buying in a HCOL area. Values in our area have skyrocketed along with everywhere else so I would estimate our current loan to value ratio is about 43% based on some recent comps in our neighborhood. The Equifax report has a section for "debt-to-credit ratio" where my revolving accounts are at 5% but my mortgage is at 77% because they are comparing the mortgage balance to our original loan amount. Doesn't this seem meaningless since the "credit limit" on this account, which is the initial loan amount, doesn't really have anything to do with the house? It almost seems like penalizing the consumer for borrowing a smaller amount of money in the first place rather than going right up to the ridiculously high amount they could have gotten approved for?

Ultimately I know it doesn't matter because my score is fine and we aren't planning on taking out any loans anytime soon but I'm still irrationally annoyed lol.

[holly116]

Oh I feel you on this one! We moved last year and did a cash out refi to access the equity we had in our old home to buy the new one before listing. Then we bought the new one and sold the old one immediately. And then we refi-ed the new one almost immediately when the rates dropped. That refi took so long to close that the bank pulled our credit twice. So it looks like I have a million pulls and new accounts when really, at the end, I have one 30 year mortgage with the same issue as you - significant equity since we put a healthy amount down and but hardly any drop from the original loan amount, so that dings my score too.

My score has been making 30+ point swings back and forth every month for a year, never dipping lower than 760 or so but it irritates the hell out of me. We use credit for everything and then pay it off every month. So, based on when they pull it, I could have a few points drop in available credit percentage, but again, I never carry a balance and just use the cards for rewards.

DUMB.

[puppylove64]

Yeah I hate that if you just bought a house or car, the loan balance is too high because you haven’t paid it down much yet. That shouldn’t ding your credit

[ellipses84]

The whole system is irritating. We don’t own a home right now and once DH paid off his student loans, and no longer had a car loan, he started getting dinged for not having any “good” debt with monthly payments. I’ve debated having him take out a super small loan or refinancing a car that’s almost paid off in his name, but it would be a huge hassle and probably cost money for state registration so we haven’t done it.

[expectantsteelerfan]

I agree that it's stupid the way it works. We also bought and sold a house recently, and our credit has been swinging 20ish points up and down ever since.

I do have 2 credit lines that I never or almost never use, but keep open. One is an AmEx that I keep open just for early access to a few things occasionally, I buy something small on it like once a year and pay it off immediately. The other was through our bank that I opened to get 0% interest for a year for a single purchase (that was paid off throughout that year) and I've never charged anything else to it, but I keep it open because I feel like closing it would negatively affect our scores. Something like that might help your 'too few accounts paid as agreed' issue.

[kitty]

I guess their algorithms aren't really tailored to the MM crowd...so I guess that may make this whole post a bragplaint??? lol

[whitemerlot]

There is always a list of favors that impact your score, even when it’s an extremely high score. Pay attention to trends but if your score is high enough to qualify for top credit, it can just be ignored.

[konapoppy]

Dec 7, 2021 10:52:27 GMT -5 kitty said:

I guess their algorithms aren't really tailored to the MM crowd...so I guess that may make this whole post a bragplaint??? lol

This issue affects people’s lives in real ways. I have a friend in her 60s who is Black and just bought a home for the first time and had the same issue - she has basically only used her debit card her whole life which has really affected her credit score negatively.

I really wish there would be an overhaul of credit scores.