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With just this information in front of me – I can’t really tell if this is a statistical outlier.
Also something of a lagging indicator as you need to actually start missing payments before they fall. And not terribly significant if you were only seeing them shift a few points during the worst foreclosure crisis in US history.
Then there's another question of their validity in an industry geared towards marketing and sales. Keep in mind that many of the companies with the worst foreclosure rates had AAA credit scores right up until bankruptcy.
Wouldn't scores fall earlier than that as more people utilized their credit lines and their credit: debt ratio changed? I'm sure the impact is much less than missing payments, but I think that would be an important thing to monitor for trends
Assuming lots of people are sitting on lines of credit they're not using, I suppose. But unless you're nearing your max your credit score actually goes up if you're regularly making payments on outstanding debt.
They can also fall for stupid reasons. I recently finished paying off my car and my credit score dropped by 6 points!
That'll teach you not to participate in capitalism.
This is only a brief fluctuation as the average age of your accounts decreases.
It's not like they want to punish you for paying off your car.
The reality is that a high percentage of the population loads up on more debt after paying off current debts, so the algorithm reflects that. Usually those points come back after a couple of months.
That makes sense, even if it seems dumb to be “pre-punished” for something I’m not planning on doing.
Not sure about that, but what I do know is that once an account is paid off, it closes and mostly no longer factors in. The fact that you paid it off in full doesn't matter more than whether you made all your payments on time. An account suddenly closing because it's paid will affect at least 3 factors of your score:
These factors all have different weights and timescales, your score will typically go back to the level it was at before within a few months if nothing else changes. What matters the most is having a long history of on-time payments. The shitty thing is that any missed payment hurts 10x more and will stay on your report for ages. This is all for the US system only, which should be obvious if you're reading this and not American.
Well.
You can say it hasn't happened in 18/18 years since it last happened.
This admin just reintroduced medical debt to be included in credit scores again, while also restarting student loan collections.
So the data being measured has changed, and also people had a sudden increase in large payments.