Equifax credit score dropped for no apparent reason

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Scryden
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Equifax credit score dropped for no apparent reason

Post by Scryden » 01 Nov 2017 22:08

Hello Everyone,

I have a concern about an unexplainable drop on my Equifax credit score.

I am new to the country (came from Europe) and had no credit history yet. I opened a secured Mastercard with RBC with a limit of $1000 to start building up my credit history. This single creditcard is all I have with regards to loans. I have no other debts, no car loans, no mortgage no nothing. Just this creditcard. I always stay below 30% utilization ratio ($300). Everytime I get close to this number, I pay it off. No matter what day of the month it is.
When I receive my new credit card statement, I pay it off in full about a week after I received the statement. So far my score rose every month and I was at a score of 698. However, over the month October my Equifax reported score dropped by 6 points to 692 and I have absolutely no clue why. Like I said, I pay off my statement balances in full about a week after I receive my statements and my utilization ratio never goes beyond 30%. I make multiple payments each month to stay below that number. So what can possibly be the reason it went down by 6 points?

Also, my Transunion score is 713. Not a clue either why it is so far apart from my Equifax score.

As a new guy from Europe, this (flawed?) system is very, very confusing. I am on top of all my payments. Just because people told me the importance of your credit score. So I am doing everything I can to build it up as quickly as possible and then this happens. I know that some people are probably going to say that a 6 points drop is nothing and can safely be ignored. But the point is, over an entire month I dropped by 6 points instead of rose. That means that a month of "hard work" staying on top of my payments just went to heck for no reason. In other words, I am being negatively judged by Equifax for paying off my debts quickly which doesn't make a lick of sense.
Based on my story described above, what did I do wrong that caused this drop?

Thanks a lot for all the responses. It really helps me understand this system and to improve.

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adrian2
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Re: Equifax credit score dropped for no apparent reason

Post by adrian2 » 02 Nov 2017 09:13

Scryden wrote:
01 Nov 2017 22:08
I am new to the country (came from Europe) and had no credit history yet. I opened a secured Mastercard with RBC with a limit of $1000 to start building up my credit history. This single creditcard is all I have with regards to loans. I have no other debts, no car loans, no mortgage no nothing. Just this creditcard. I always stay below 30% utilization ratio ($300). Everytime I get close to this number, I pay it off. No matter what day of the month it is.
When I receive my new credit card statement, I pay it off in full about a week after I received the statement. So far my score rose every month and I was at a score of 698. However, over the month October my Equifax reported score dropped by 6 points to 692 and I have absolutely no clue why. Like I said, I pay off my statement balances in full about a week after I receive my statements and my utilization ratio never goes beyond 30%. I make multiple payments each month to stay below that number. So what can possibly be the reason it went down by 6 points?
6 points is nothing, basically like a rounding error. Don't fret it and carry on with your life.
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kcowan
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Re: Equifax credit score dropped for no apparent reason

Post by kcowan » 02 Nov 2017 09:15

I don't track my credit score but I have heard that inquiries on your file can influence the score. E.g. If a CC company is preparing to make you an offer (like a new card or a higher credit limit), it can cause fluctuations.
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Re: Equifax credit score dropped for no apparent reason

Post by AltaRed » 02 Nov 2017 10:01

IMO, the OP should not be micro-managing credit score. Small variations seem to be my ongoing history as well for no apparent reason.

Added later: I tend to agree with PlanB's comments. I wouldn't be making interim payments to keep below 30% utilization rate. Better to go to higher utilization and pay the statement in full every month on schedule.
Last edited by AltaRed on 02 Nov 2017 10:43, edited 2 times in total.
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Re: Equifax credit score dropped for no apparent reason

Post by planB » 02 Nov 2017 10:37

My FICO score is listed on my US bank login page, so I see it every time I log in. I noticed that overpaying credit cards or paying in round numbers (like $1000s) will cause it to drop. This implies that I can't manage debt or something like that.

Anecdotally I have noticed that my US coworkers watch their scores closely. People tend to run on cash flow and many things are financed. As a new resident I understand why you want to establish a good financial record.

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Re: Equifax credit score dropped for no apparent reason

Post by Quebec » 02 Nov 2017 18:47

Financial Consumer Agency of Canada says that the most important factors to improve your credit score are
1. Payment history (pay on time)
2. Use of available credit (utilization rate)
3. Length of credit history (the longer the better)
4. Number of inquiries (few inquiries are better)
5. Types of credit (several types are better)

In relation with no. 2 they add that
What counts toward your credit score is how much of your available credit you actually use, not your credit limits by themselves.
When you use a large percentage of your available credit, lenders see you as a greater risk, even if you pay your balance in full by the due date...

Try to use less than 35 percent of your available credit.
One interpretation of the above is that if the OP does not want to go above 30-35% utilization, he/she should increase his/her credit limit so that a single monthly payment does the job. This is what I actually did with my Amazon.ca card, which had a low limit, when I found out about the utilization thing.

Cheers
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Scryden
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Re: Equifax credit score dropped for no apparent reason

Post by Scryden » 02 Nov 2017 19:09

Thanks a lot for the answers!
Quebec wrote:
02 Nov 2017 18:47
What counts toward your credit score is how much of your available credit you actually use, not your credit limits by themselves.
When you use a large percentage of your available credit, lenders see you as a greater risk, even if you pay your balance in full by the due date...

Try to use less than 35 percent of your available credit.
Does that mean you cannot use more than 35 procent of your available credit in a calendar month?
So for example: I accumulate $300 on my creditcard and then pay it off before I use it again. Then when I look at my creditcard statement in the new month I see for example: $500 debit and $400 credit. So effectively, I spend $500 (50%) on my creditcard during that calendar month but by paying it off on time during the month I never went past the 30% ratio. So are they looking at your outstanding balance or how much you spend on the card in total during the month?

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Re: Equifax credit score dropped for no apparent reason

Post by AltaRed » 02 Nov 2017 19:30

You can use 100% of the credit limit, but as mentioned, utilization can impact credit score. I wouldn't worry at all about utilization in the 50-70% range. I've max'd out my credit limit at least half a dozen times in the past decade and don't recall a credit score impact....but then when my credit score is over 800, I don't notice variances. I suspect a credit limit of $50k (in aggregate over 2-3 cards) and a utilization in the 80% range MIGHT be a bigger cause for concern.

Credit cards are revolving credit. A telecom account for your smartphone would be installment credit. So if you have a smartphone, there are two types of credit on file already.
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Re: Equifax credit score dropped for no apparent reason

Post by Scryden » 02 Nov 2017 20:50

AltaRed wrote:
02 Nov 2017 19:30
You can use 100% of the credit limit, but as mentioned, utilization can impact credit score. I wouldn't worry at all about utilization in the 50-70% range. I've max'd out my credit limit at least half a dozen times in the past decade and don't recall a credit score impact....but then when my credit score is over 800, I don't notice variances. I suspect a credit limit of $50k (in aggregate over 2-3 cards) and a utilization in the 80% range MIGHT be a bigger cause for concern.

Credit cards are revolving credit. A telecom account for your smartphone would be installment credit. So if you have a smartphone, there are two types of credit on file already.
Thanks a lot.

What about raising your credit limit? I am using Creditkarma to monitor my Transunion score and Mogo to monitor my Equifax score. Everytime I login to my accounts they are giving me creditcard offers based on my current credit score. When is a smart idea to open up an extra card or convert my secured card to an unsecured card with a higher limit? I've had this RBC card since June this year, so almost half a year now.
Transunion score is at 713, Equifax at 692.

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Re: Equifax credit score dropped for no apparent reason

Post by AltaRed » 02 Nov 2017 21:20

I'd firstly see if RBC will increase your credit limit and/or 'unsecure' your current card. If they won't do that, it means that while your credit score is good, you don't have enough of a 'record', meaning time, to qualify for anothe card. Give it a year and try again.

But If you do seek out a second card, I'd go with a MasterCard (good to have one Visa and one MC anyway) and in my opinion, a 1% cashback card from the likes of Capital One or BMO or.....? Remember that if/when you seek out a second card, that will be another hard inquiry into your credit record. It seems too soon to do that within 6 months. Why the pressure to 'qualify'?
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Re: Equifax credit score dropped for no apparent reason

Post by SQRT » 03 Nov 2017 05:21

AltaRed wrote:
02 Nov 2017 19:30
You can use 100% of the credit limit, but as mentioned, utilization can impact credit score. I wouldn't worry at all about utilization in the 50-70% range. I've max'd out my credit limit at least half a dozen times in the past decade and don't recall a credit score impact....but then when my credit score is over 800, I don't notice variances. I suspect a credit limit of $50k (in aggregate over 2-3 cards) and a utilization in the 80% range MIGHT be a bigger cause for concern.

Credit cards are revolving credit. A telecom account for your smartphone would be installment credit. So if you have a smartphone, there are two types of credit on file already.
When we bought our Arizona home in 2012 we wanted a US $ card with decent rewards. At the time the only such card needed to be actually based in the US. It was incredibly difficult to get one without a SS number and US based credit history. Eventually got a SPG AMEX card but with a low ($10k ) limit. Needed to go through Canadian Amex to do this. Have since been able to get this limit increased and I think we are up close to $50k now. Some months we used the card for much more than the limit and had to keep paying interim lump sums to keep it under the limit. Not sure the effect on our credit score but certainly didn’t stop us from getting the limit increased. When I do look at the score it’s usually well above 800 but sometimes dips into the high 700’s. No interest tying to figure out why.

The whole credit score thing is “big” in the US. Sometimes I think Americans are more concerned about their credit score than their actual finances. Small fluctuations say 50 points in any given month are meaningless.

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Re: Equifax credit score dropped for no apparent reason

Post by kcowan » 03 Nov 2017 10:15

Canada Post uses Equifax to verify your identity when forwarding your mail. I have tried to use it for 3 years and always been rejected. It seems that I do not know enough about how Equifax works.

I have to drop into an office and verify my ID.

(One of my pet peeves is that CP forces me through the process every year even though it is alway the same forwarding address and just under 6 months!)
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Re: Equifax credit score dropped for no apparent reason

Post by adrian2 » 03 Nov 2017 10:40

kcowan wrote:
03 Nov 2017 10:15
Canada Post uses Equifax to verify your identity when forwarding your mail. I have tried to use it for 3 years and always been rejected. It seems that I do not know enough about how Equifax works.
Go to the Equifax website and ask for a free copy of their report. They'll make you mail/fax some ID for verification. After receiving the printed copy of the report in the snail mail, carefully examine the info they have, so for the next time, you'll know what answers they expect to their verification questions.
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Re: Equifax credit score dropped for no apparent reason

Post by kcowan » 03 Nov 2017 16:09

adrian2 wrote:
03 Nov 2017 10:40
kcowan wrote:
03 Nov 2017 10:15
Canada Post uses Equifax to verify your identity when forwarding your mail. I have tried to use it for 3 years and always been rejected. It seems that I do not know enough about how Equifax works.
Go to the Equifax website and ask for a free copy of their report. They'll make you mail/fax some ID for verification. After receiving the printed copy of the report in the snail mail, carefully examine the info they have, so for the next time, you'll know what answers they expect to their verification questions.
Thanks. I just did it.
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Re: Equifax credit score dropped for no apparent reason

Post by amphitryon » 04 Nov 2017 07:55

RBC has a neat feature. If you have an account - any type it seems - you have access to your TransUnion Credit score. The link is right at the main page showing your account(s). This also gives you a few on-line reports, list of cards in use, limits and $$ owing etc. Almost worth keeping a small account with them.
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Re: Equifax credit score dropped for no apparent reason

Post by kcowan » 04 Nov 2017 14:14

amphitryon wrote:
04 Nov 2017 07:55
RBC has a neat feature. If you have an account - any type it seems - you have access to your TransUnion Credit score. The link is right at the main page showing your account(s). This also gives you a few on-line reports, list of cards in use, limits and $$ owing etc. Almost worth keeping a small account with them.
Thanks. It is instructive for sure. My LOC from TD Bank is on there from 1998! For some reason, my score is on an upward slope. The only thing that has happened is that my spend from Europe has been recorded on the Chase FX card. I guess spending and paying is what it is all about.
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Re: Equifax credit score dropped for no apparent reason

Post by Scryden » 04 Nov 2017 21:04

amphitryon wrote:
04 Nov 2017 07:55
RBC has a neat feature. If you have an account - any type it seems - you have access to your TransUnion Credit score. The link is right at the main page showing your account(s). This also gives you a few on-line reports, list of cards in use, limits and $$ owing etc. Almost worth keeping a small account with them.
I didn't know about that feature with RBC. But it would be great if it actually worked. Been seeing this the entire day:

"Credit Bureau Not Responding: The credit bureau's system may be temporarily unavailable.

Outages often occur at night and can last up to four hours. A daytime outage will probably last less than an hour."

It has been well over 10 hours....

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Re: Equifax credit score dropped for no apparent reason

Post by amphitryon » 04 Nov 2017 22:35

For what it's worth: I just signed in at RBC to check - the TransUnion site comes up with no problems.
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Re: Equifax credit score dropped for no apparent reason

Post by adrian2 » 05 Nov 2017 07:23

amphitryon wrote:
04 Nov 2017 07:55
RBC has a neat feature. If you have an account - any type it seems - you have access to your TransUnion Credit score. The link is right at the main page showing your account(s). This also gives you a few on-line reports, list of cards in use, limits and $$ owing etc. Almost worth keeping a small account with them.
CIBC has a similar feature with the Equifax information, although not showing that level of detail.
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Re: Equifax credit score dropped for no apparent reason

Post by SQRT » 05 Nov 2017 08:50

I have a RBC Westjet MC so I just tried the credit score feature. Works fine. 887. The US based score I get from AMEX is much lower, around 820. Makes no difference to me.

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