As featured in The Wall Street Journal, Money Magazine, and more!
     

My Credit Score is Stuck at Good

This article was written by in Credit. 24 comments.


I am a supporter of Credit Karma, a free service that shows you your TransUnion credit score, among other things, as many times as you want. Lately it seems like it hasn’t been working. It’s been reporting a FICO for me of 732 since March, and I’ve made what I feel are dramatic differences to my credit situation from January through August. I’ve paid off about $6,000 in credit card debt, but the score hasn’t gone up or down a single point.

A few years ago, when my credit situation was even worse, I used to dream about a score over 720, because that would’ve put me in Excellent Credit territory. Unfortunately, there was a worldwide credit crunch, and now you need to have a score of at least 750 to be considered an excellent credit risk, or in other words, not really risky. I hadn’t reviewed my credit reports in quite a while, so I went to AnnualCreditReport.com to look for reasons why it isn’t higher. After reviewing all three free reports, I found one credit card account that was 30 days late, once, back in April 2006.

I know that CreditKarma isn’t broken, because it’s reporting changes to my accounts correctly, but the score is frustratingly stuck. What’s worse, when I use their Credit Simulator to see what actions could positively or negatively affect my credit, there is nothing that will make it go up. I tried simulating:

  • adding a new card with a $10,000 limit
  • increasing a credit limit on an existing card by $50,000 (I picked a ridiculous number because nothing lower worked)
  • increasing my on-time payment history by 24 months

None of that helps.

So, I started hoping that CreditKarma’s calculations weren’t too trustworthy. Unfortunately, the only way to check that would be to purchase a credit score from one or more of the three agencies that provide them. After looking for reasonable options—getting a free score but being auto-enrolled in a $14.95 monthly program is not reasonable—I went to MyFICO.com and ordered my credit score for TransUnion. It’s still 730.

I am at a loss. I was hoping that drastically reducing my revolving credit balances would make a positive impact to my credit score, but that doesn’t seem to be the case. On the upside, now I know that CreditKarma’s FICO is very close to the score that TransUnion provides, and that the credit nightmare I went through with Verizon Wireless has finally fallen off my credit report.

Actually, there is one more silver lining. Equifax has a much higher impression of my credit history. They put me at a 773, which is in their highest bracket.

But their highest bracket starts at 760, which it seems like I could easily slip under at any moment. My credit-to-debt ratio is 27%, my credit history is 19 years old and in what I think is very good standing, nothing has been late in over four years, and I’m confused. I’m open to any advice, if you have it.

Updated December 20, 2012 and originally published August 24, 2010. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

Email Email Print Print
avatar
Points: ♦1,358
Rank: Quarter
About the author

Smithee formerly lived primarily on credit cards and the good will of his friends. He is a newbie to personal finance but quickly learning from his past mistakes. You can follow him on Twitter, where his user name is @SmitheeConsumer. View all articles by .

{ 24 comments… read them below or add one }

avatar Josh

Smithee,

Based on my somewhat limited experience, your debt-to-credit ratio of 27% is what is holding you in that range. To get a really great credit score, this ratio needs to be 10% or lower, but I would expect that you will see a bump when you get below 20%. Also, do you have any inquiries on your report? If so, there will be a bump when they go away.

Reply to this comment

avatar Edward Antrobus

Creditkarma gets their credit data from TransUnion, so it’s not surprising that the offer similar scores.

But I have a similar problem. My score is around 600 and nothing in their calculator shows me being able to make an improvement of more than 50 points. I’m operating under the assumption that I can get it higher over time; otherwise, why would I bother – what would 650 get me that 600 won’t?

You shouldn’t look at that Equifax score as being at the low end of the best bracket. Think of it as being in the upper 10% of all possible credit scores

Reply to this comment

avatar Lynn

Its funny because my Transunion score is low too (I am able to get it through the class action settlement they had). I have used credit Karma and the scores are the same. Both are about 720. Unfortunately for me, my credit card is a revolving limit so they don’t even look at it as a credit limit and it says I have 99% of my total credit available used. Which is true if you don’t consider my credit cards (my HELOC is almost maxxed out). The only way for me to get a better credit score is to pay off my home equity loan in full. And even still, it doesn’t improve it very much. I was just commenting yesterday about how the scores are a bunch of crap. I am considering refinancing but with an experian score of 747, I am not sure I would get the best rates. I have never had a late payment, have a long credit history etc. The only thing hurting me is the amount of credit used which is not accurate.

Reply to this comment

avatar Evan@MyJourneytoMillions

As josh mentioned I noticed my score getting higher and higher as those inquiries from buying my house and refinancing my car dropped off.

Reply to this comment

avatar Joe

My credit score has been stuck at 780 for almost the exact same amount of time on Credit Karma. During that time, I have had 3 credit inquiries drop off, have paid off a 25K student loan, and an 18K line of credit. I have 0 in credit card debt and $75K in credit available on credit cards. The credit score won’t budge for some reason. I too am wondering if something is wrong with Credit Karma recently.

Reply to this comment

avatar Stannius

That’s what I was going to say. Ration above 20% is probably the problem.

Reply to this comment

avatar Nick

I agree with the debt to income folks and note it could also be your length of credit history that gets you stuck. Try simulating revolving balances to zero and see what happens instead of increasing the limits. So instead of adding accounts (which will add inquiries and reduce average account age), try reducing what you owe on exhisting accounts.

A few interesting points from a recent equifax report I got (I’m stuck at 798 – so annoying being 2 points away from the “Great Eight”):

most FICO high achievers owe less than $600 on revolving accounts

the average high achiever is 19 years. (Maybe add a few more years and see – not just 2)

average age of accounts for the high achievers is between 6 and 12 years.

At the end of the day, when you’re at 730 there probably aren’t easy fixes like if you have negative reporting to challenge or fix. Good luck.

Reply to this comment

avatar Smithee ♦1,358 (Quarter)

Interesting. I tried looking online for “what is a good debt to income ratio?” and all I found was “under 36%”.

Reply to this comment

avatar Smithee ♦1,358 (Quarter)

I can’t reduce the revolving balances to zero, since they are all already at zero. :)

I would try to increase the age more than two years, but two years is all that CreditKarma lets you simulate.

Reply to this comment

avatar Mark Ruiz

First off, I love following your articles… This is my first response to your blogs… I’ve been restoring credit for 26yrs and have developed a process to move my clients scores up. So without revealing too much in an open forum such as this, I thought I’d give you the answer you seek. Without looking at your credit report, I know you’ve got items on your file that are “anchors” to your credit score. Most people when working on improving their credit scores focus on the things that we all know DO move your score the fastest… 1. Derogatory items, 2. Balances, 3. Inquires, etc. but then they reach a point like you that nothing seems to help.I discovered this process several years ago when a client of mine came to me with a 598 FICO and had zero derogs on his file. So I asked him if he wanted to be a Guinea Pig, while I figured it all out. He agreed and I set out to understand this new “layer of the onion” of credit scoring I’d just peeled open.Within 9 months I had my answer and the client had his 750 credit score back, after 12 more months he was up over 810. And my “Level 2″ process was born. Since then we’ve worked on hundreds of clients with that process and I’m not surprised with anyone’s score anymore, in fact I’ve got a running bet with my clients (many mortgage brokers) for $100 to anyone that brings me a current credit report with FICO score that I don’t guess within 10pts of the actual score. (It’s kinda sick in a way actually) :)Anyway, enough of my story… You’ve got a credit file disease I call “Illusionary Positives”. As you might know, “Positives” on your credit file stay 10yrs vs the 7yrs for derogatory items. But, those “Positive” items are not created equal and many of them are downright BAD for your score. So although many people will review their credit file for errors (ONLY in the derog sections) Many inaccurate items found in “Good” sections are really hurting your score.Let’s take one of my least favorite companies… Capital One… for many years, (they’ve denied this publicly, and I personally received one myself) they sent out cards with very low limits to people that applied with them but did not receive the limit they had hoped for. So the client said NO, I don’t want that card and never activated it. (In my case, I’d asked for a “rewards” card, they DID approve me, but only for $300, how are you supposed to accumulate any rewards with a $300 limit?) I told them to take their card and well, you know. Guess what showed up on my credit file, a card I never wanted. So I did what most anyone would’ve done, I send the card back, cut up and never activated. What did they do… They cancelled the card of course. But now I had a credit card on my file that had been open for just ONE MONTH. Never late mind you, but yes I just created an Illusionary Positive on my file. That Anchor would have kept my score down for 10yrs, because it was bringing down another VERY important part of the score… The “Average number of months” portion. I’m sure if you look closely, you’ll see several of those items on your file… Refinanced Mortgage loansShort term loansCar loans you paid off earlyCredit cards you fell out of love with and closed.Anything that would generate a closed acct with less then 36months history is gonna be a blight on your file for 10yrs. An “Anchor” if you willNever Close a credit card (unless the annual fee is unbearable)Never refi a car loan (unless you MUST)Don’t get a mortgage loan, with the intention of refinancing it in the next 3 yrs!!NEVER apply for a store card JUST to get the 10% discount!!These will all cause you to suffer LONG term on your credit scores even when you have “PERFECT” credit.

Reply to this comment

avatar Richard

Hello Mark

Please contact me

Reply to this comment

avatar Mark Ruiz

In addition to my previous post, you will get a 10-15pt jump if you “Carry” a very small balance on ONE of your credit cards every month. IE: Use a gas card and pay off monthly, although your balance isn’t really a balance b/c you’re paying it off every month. It gets reported that way to the bureaus and you’ll see a jump by keeping a tiny balance. The Bureaus get a “snapshot” of your statements each month. Must be more then $20 and less then $120 to get the maximum boost.

Reply to this comment

avatar Freeby50

“I found one credit card account that was 30 days late, once, back in April 2006.”

Does Equifax show the 30 day late item?

Several years ago when I bought my current home I had scores of Experian 724, Transunion 725, Equifax 777 Experian and Transunion showed a 30 day delinquency but not the Equifax

I figured the 50 point different must have been due to that single 30 day late payment.

Reply to this comment

avatar Mark Ruiz

A single 30 day late on a credit report isn’t gonna count for more then 10pts, and certainly isn’t going to cause a consumer to flat-line. And with recent changes to the FICO model, a single 30day shouldn’t hurt the file at all after 24months. See my post below for the likely culprit… would love to get some feedback from Smithee on his report review for “Illusionary Positives”. hint hint :)

Reply to this comment

avatar The Yakezie

Looks pretty darn “good” to me! :) Anything about 720 and you’ll be treated well by everyone. 700+ similar too.

Reply to this comment

avatar Holly

Josh (above) says debt-to-credit ratio…not debt-to-income…

Reply to this comment

avatar Josh

780 is a ridiculously high credit score that’s hard to move up. If you no longer use your credit cards and want to drive your score up, the only thing I can think to do is charge something on a card every month and pay it off. You actually get more points for using credit than for not using it.

Reply to this comment

avatar Mark Ruiz

That is only true if it’s your ONLY card you are using. Because the bureaus actually use the snapshot of the statement sent to you, if you use your credit card a lot (most of your credit line) you’ll actually hurt your score with that practice. The only time you SHOULD use your credit card is if you have not used it in more then 6 months as it’s likely your tradeline might get closed due to inactivity.

Reply to this comment

avatar Mark Ruiz

That is only true if it’s your ONLY card you are using. Because the bureaus actually use the snapshot of the statement sent to you, if you use your credit card a lot (most of your credit line) you’ll actually hurt your score with that practice. The only time you SHOULD use your credit card is if you have not used it in more then 6 months as it’s likely your tradeline might get closed due to inactivity.

Reply to this comment

avatar Bucksome

Thanks for sharing about creditkarma. I have a 784 score and an A grade. I really can’t imagine applying for credit in the forseeable future so I wonder if there’s any value?

Reply to this comment

avatar Apex

You say you got your clients scores up drastically when they had these illusory positives. So presumably you got those removed from the credit report. How does one go about getting them taken off the report?

Reply to this comment

avatar Mark Ruiz

The exact same way you would get anything else off your report.

Yes, the only way to improve a score kept low from Illusionary Positives is by removing the offending item. The FCRA allows anything deemed “Adverse” may be disputed by a consumer based on Inaccuracy or by being Obsolete. So, you must first identify the item, then find something wrong with it, then you can dispute with the credit bureaus. (NOTE: you don’t have to tell them what is wrong with it, only that it is “inaccurate or obsolete” within the definition of the FCRA) and then it must be “re-investigated” meaning it’ll be challenged and a verification will be attempted with the source of the info.

Reply to this comment

avatar Jyl

My credit score at TransUnion has been stuck at the same number for over five years, no matter how my balances fluctuate. There is nothing negative on my report. I complained to them about this, but it still remains at 762. I find that Equifax varies – it’s up by 27 points, over the past 18 months. Actually, those businesses I ask report using Equifax over Trans Union and I believe it to be a more accurate representation. I have to wonder whether it’s simply a way of making money, for so many of these “reporting” companies, who present the same numbers to their customers, year after year. Questionable karma indeed, but not necessarily from the customer.

Reply to this comment

avatar Grn13

Mark,
Thank you for your explanations. In 2004, I had bought my home and it was then transferred from one lender to another lender a couple different times. So, the credit report shows the same original loan amount with different lenders, showing “transferred” on it. Do all these multiple loan transfers affect the credit score? I have tried to get one of the duplicate JP Morgan Chase accounts removed, but Experian responded they proved it be valid.

Also, if there is a revolving credit card account on file for the last 10 years that has a $100 balance showing on the report, because the credit reporting agencies must have not been informed that this account was actually closed. Does it hurt the credit score, or should I just leave it on there?

Reply to this comment

Leave a Comment

Connect with Facebook

Note: Use your name or a unique handle, not the name of a website or business. No deep links or business URLs are allowed. Spam, including promotional linking to a company website, will be deleted. By submitting your comment you are agreeing to these terms and conditions.

Notify me of followup comments via e-mail. You can also subscribe without commenting.

Previous post:

Next post: