My credit score dropped 20 points this week because...

[Ali Gator]

I've always had a credit score in the 800s, 'excellent credit'. I pay everything on time, more than the minimum, and keep by balances pretty low. Today I checked my credit score with two companies reporting, and my score dropped 20 points to 'very good' through no fault of my own.  What was the reason ?

 

After 40 years of having a credit history with JC Penney, they closed my account this week. (I opened the card when I was in college, as a college professor told everyone to open at least a Sears card and JC Penney card - at the time, they were the only two 'national stores' which had locations in just about every state, so if we were traveling for business and our luggage was lost, we could at least buy clothes at a mall nearby, which probably had a Sears or JCP. Plus, Sears had an automotive shop back then in the mid-80s. Pretty sound advice.)  I haven't used my JC Penney card in about a decade, because JCP closed their 'underperforming' store in my area, which was a few minutes from my home. The closest one to me is about thirty minutes away - there's nothing in JCP that would lure me to drive thirty minutes.  So forty years of excellent credit history has been wiped out thanks to JCP.

Six years ago, my credit score was hit when Nordstrom - which I had a credit history with for 20 years - closed their only store in my state. Twenty years of excellent credit history was wiped away with them. When I called and complained, they said that they closed my account because I only shopped their store in my state, never shopped on-line with them, and never shopped in any of their stores in other nearby states. So they believed I was done as a customer, since I proved to be a 'one location brick and mortar' shopper. Great. (Same thing happened to my aunt back then).

 

As for Sears, they closed my account when they closed all their stores in my area about fifteen years ago -can't recall if it hit my credit score as hard back then. But it was about 25 years of excellent history wiped out.

[BuffaloKyle]

I would say a credit score in the high 700's is still "excellent" not "very good". I finally made it into the 800's. I always pay off the entire balance every month on my credit cards. I prefer using credit cards for all the reward points and cashback. It kills me when I see and hear about people paying cash for everything. I know some people have to so they don't overspend but they are missing out on so much free money. I've had my Kohl's credit card for 20 years now. Got one when I was 18 and am about to be 38. The next oldest one is my American Express which I've had 17 years but the rewards program for it stunk and so many local businesses don't accept Amex. So I cashed in all my points on that one and haven't used it in a couple years now. I'm sure they'll close it on me soon so that will probably drop me into the 700's again. I got the Wells Fargo active cash card instead that's a visa which I use right now for everything. You get unlimited 2% cash back on everything and they also gave you a $200 bonus as well after spending just $500 in the first three months. Then I like to use it for gift cards from their rewards store and they always have a great rotating selection of ones that are on a 10% off sale so it's even more free money.

[+ BenjaminNicholas]

It's all a part of the FICO game.  Just wait a bit (45-60 days), it'll rebound.

Ultimately, if you don't have a healthy mix of different kinds of credit, one or two closures will drastically affect you.

Also, know the difference between what a charge vs credit card does for your open credit statistics. 

Good luck!

[+ Vegas_Millennial]

1 hour ago, Ali Gator said:

I've always had a credit score in the 800s, 'excellent credit'. I pay everything on time, more than the minimum, and keep by balances pretty low. Today I checked my credit score with two companies reporting, and my score dropped 20 points to 'very good' through no fault of my own.  What was the reason ?

 

After 40 years of having a credit history with JC Penney, they closed my account this week. (I opened the card when I was in college, as a college professor told everyone to open at least a Sears card and JC Penney card - at the time, they were the only two 'national stores' which had locations in just about every state, so if we were traveling for business and our luggage was lost, we could at least buy clothes at a mall nearby, which probably had a Sears or JCP. Plus, Sears had an automotive shop back then in the mid-80s. Pretty sound advice.)  I haven't used my JC Penney card in about a decade, because JCP closed their 'underperforming' store in my area, which was a few minutes from my home. The closest one to me is about thirty minutes away - there's nothing in JCP that would lure me to drive thirty minutes.  So forty years of excellent credit history has been wiped out thanks to JCP.

Six years ago, my credit score was hit when Nordstrom - which I had a credit history with for 20 years - closed their only store in my state. Twenty years of excellent credit history was wiped away with them. When I called and complained, they said that they closed my account because I only shopped their store in my state, never shopped on-line with them, and never shopped in any of their stores in other nearby states. So they believed I was done as a customer, since I proved to be a 'one location brick and mortar' shopper. Great. (Same thing happened to my aunt back then).

 

As for Sears, they closed my account when they closed all their stores in my area about fifteen years ago -can't recall if it hit my credit score as hard back then. But it was about 25 years of excellent history wiped out.

 

1 hour ago, BuffaloKyle said:

I would say a credit score in the high 700's is still "excellent" not "very good". I finally made it into the 800's. I always pay off the entire balance every month on my credit cards. I prefer using credit cards for all the reward points and cashback. It kills me when I see and hear about people paying cash for everything. I know some people have to so they don't overspend but they are missing out on so much free money. I've had my Kohl's credit card for 20 years now. Got one when I was 18 and am about to be 38. The next oldest one is my American Express which I've had 17 years but the rewards program for it stunk and so many local businesses don't accept Amex. So I cashed in all my points on that one and haven't used it in a couple years now. I'm sure they'll close it on me soon so that will probably drop me into the 700's again. I got the Wells Fargo active cash card instead that's a visa which I use right now for everything. You get unlimited 2% cash back on everything and they also gave you a $200 bonus as well after spending just $500 in the first three months. Then I like to use it for gift cards from their rewards store and they always have a great rotating selection of ones that are on a 10% off sale so it's even more free money.

Just use your oldest credit card about once every two years to keep it active, even if it's just to buy a stick of gum.  That's what I do to keep my oldest credit card active.

[+ FrankR]

4 hours ago, BuffaloKyle said:

I would say a credit score in the high 700's is still "excellent" not "very good". I finally made it into the 800's. I always pay off the entire balance every month on my credit cards. 

I believe that is correct, a Fico score above 740 is considered excellent.

[MikeThomas]

BTW… the FICO scores you find online are not the ones banks use for mortgage and auto loan decisions.  Those scores are typically adjusted downward.

[Jim_n_NYC]

12 hours ago, Ali Gator said:

"So forty years of excellent credit history has been wiped out thanks to JCP."

From TransUnion: "An account that was in good standing with a history of on-time payments when you closed it will stay on your credit report for up to 10 years."

So, this closure isn't going to immediately affect your score.  And the one you said was closed 6 years ago shouldn't for another 4 years.

[Ali Gator]

7 hours ago, Jim_n_NYC said:

From TransUnion: "An account that was in good standing with a history of on-time payments when you closed it will stay on your credit report for up to 10 years."

So, this closure isn't going to immediately affect your score.  And the one you said was closed 6 years ago shouldn't for another 4 years.

I appreciate this info, but Credit Karma has told me quite different. 

[Jim_n_NYC]

15 minutes ago, Ali Gator said:

I appreciate this info, but Credit Karma has told me quite different. 

TransUnion is one of the three official credit bureaus, Credit Karma is a (mostly) for profit organization.

edit:  It could be that CK is thinking that your card will drop off you list of cards and the credit from that card (say it had a $10,000 limit) will be available within about a month after closure.  The length of credit history (the important factor for a credit score) remains for 10 years.

edit2: and just to drive home the point...here's from the other two credit bureaus:

Experian:  How Long Do Closed Accounts Stay on Your Credit Report? Generally speaking, if an account's payment history helps your credit score, it will stay on your credit reports for 10 years after it is closed.

Equifas:  Closed accounts reported by the lender as paid as agreed can stay on your Equifax credit report for up to 10 years from the date it was reported by the lender to Equifax. Accounts not paid as agreed can remain on your Equifax credit report for up to 7 years.

Edited June 13, 2024 by Jim_n_NYC
clarification

[+ DynamicUno]

When an account is closed in good standing, it stays on the credit report. The account age and credit limit are no longer factored into your score however.  If you haven't been using your next oldest card in a long time, now is a good time to charge something to have some recent activity on it and reduce the chance it'll be closed.

Either way the difference between a 780 and a 800 is pretty minimal when it comes to opening new credit in most cases.  The score will trend back to where you were before over time.  If you're not planning to buy a house or a car any time soon, there's no reason (other than ego) to care what your score is doing from day to day.

 

Edited June 14, 2024 by DynamicUno

[+ pizzaBoy]

On 6/12/2024 at 11:05 PM, BenjaminNicholas said:

It's all a part of the FICO game.  Just wait a bit (45-60 days), it'll rebound.

Ultimately, if you don't have a healthy mix of different kinds of credit, one or two closures will drastically affect you.

Also, know the difference between what a charge vs credit card does for your open credit statistics. 

Good luck!

^ This. My score dropped 20 points recently simply because i was carrying a higher than usual credit card balance. To be clear i pay it off in full every month, and it rebounded quickly after i paid the balance. I quit trying to figure the magic formula the credit bureaus use. You’ll make yourself silly chasing every up and down. I’m usually hovering around 830 so I’m happy. 
 

As an aside though, my then wife told me she would pay the already late Sears bill and didn’t. Our score tanked like 150 points for late payment I had to get really creative to repair that. We’ve since divorced so my credit is now my own. My point here though is that really bad things have three digit impacts. Apparently 10, 20, even 40 point fluctuations happen from regular (non derogatory) credit activity. 

[+ BenjaminNicholas]

18 hours ago, MikeThomas said:

BTW… the FICO scores you find online are not the ones banks use for mortgage and auto loan decisions.  Those scores are typically adjusted downward.

If you pull your scores on MyFICO, you can see all variations 

FICO 8, 5, 2, 9, etc. 

But yes, not all credit reporting sites give you that depth of information 

[+ BenjaminNicholas]

6 hours ago, Ali Gator said:

I appreciate this info, but Credit Karma has told me quite different. 

Credit Karma is not known for being all that accurate. 

[+ SundayZip]

Two factors have the greatest impact on your credit score; payment history and credit utilization.  My credit score bounces up and down due to credit utilization, which is the difference between aggregate credit limit and outstanding balances on credit accounts. If, for example, I have a $30K limit on a Visa card and make a $10K purchase, my credit utilization will suddenly increase which lowers my credit score. When I pay the balance on the Visa card, my credit utilization decreases and credit score goes back up.  As long as my over-all score remains good, I ignore these little bounces. 

[Monarchy79]

On 6/12/2024 at 9:33 PM, Ali Gator said:

I've always had a credit score in the 800s, 'excellent credit'. I pay everything on time, more than the minimum, and keep by balances pretty low. Today I checked my credit score with two companies reporting, and my score dropped 20 points to 'very good' through no fault of my own.  What was the reason ?

 

After 40 years of having a credit history with JC Penney, they closed my account this week. (I opened the card when I was in college, as a college professor told everyone to open at least a Sears card and JC Penney card - at the time, they were the only two 'national stores' which had locations in just about every state, so if we were traveling for business and our luggage was lost, we could at least buy clothes at a mall nearby, which probably had a Sears or JCP. Plus, Sears had an automotive shop back then in the mid-80s. Pretty sound advice.)  I haven't used my JC Penney card in about a decade, because JCP closed their 'underperforming' store in my area, which was a few minutes from my home. The closest one to me is about thirty minutes away - there's nothing in JCP that would lure me to drive thirty minutes.  So forty years of excellent credit history has been wiped out thanks to JCP.

Six years ago, my credit score was hit when Nordstrom - which I had a credit history with for 20 years - closed their only store in my state. Twenty years of excellent credit history was wiped away with them. When I called and complained, they said that they closed my account because I only shopped their store in my state, never shopped on-line with them, and never shopped in any of their stores in other nearby states. So they believed I was done as a customer, since I proved to be a 'one location brick and mortar' shopper. Great. (Same thing happened to my aunt back then).

 

As for Sears, they closed my account when they closed all their stores in my area about fifteen years ago -can't recall if it hit my credit score as hard back then. But it was about 25 years of excellent history wiped out.

With those store cards, even if there isn’t one in your area, make a purchase (even if it is a very small purchase), online at least once a year to keep it active. 
 

Neiman Marcus, Bergdorf Goodman and Saks are great with sending out reminders to those who haven’t used their cards in a while, before closing accounts. 
 

 

[Ali Gator]

This is ridiculous.  I just checked my credit score again this morning.

Apparently, my score dropped even lower (to low 700s, according to Credit Karma). Under 'see what changed' it says that Macy's closed out my account for non-use. Another 25 years of excellent credit history gone. So in the past few months, both JC Penney and Macy's closed out my account and took my combined 65 year excellent credit history with them. Again, these are the only two 'changes' to my credit profile they are reporting (I know for a fact my balances are in line, I'm never late with any payment, never delinquent, etc.).  Just can't win. 

[+ BenjaminNicholas]

2 hours ago, Ali Gator said:

This is ridiculous.  I just checked my credit score again this morning.

Apparently, my score dropped even lower (to low 700s, according to Credit Karma). Under 'see what changed' it says that Macy's closed out my account for non-use. Another 25 years of excellent credit history gone. So in the past few months, both JC Penney and Macy's closed out my account and took my combined 65 year excellent credit history with them. Again, these are the only two 'changes' to my credit profile they are reporting (I know for a fact my balances are in line, I'm never late with any payment, never delinquent, etc.).  Just can't win. 

To be fair, you didn't utilize your credit line for what was likely years.  That's on you.

You can't just get open credit and keep it at $0.  That's not the way the game works.

And stop using Credit Karma.  It's often wrong and isn't giving you an accurate picture of your real score.  

MyFICO is direct from the sources, all variations of FICO. 

[handiacefailure]

I opened a new account with PNC recently and closed the other account with them (they have a new Visa that gives a better cash back with no foreign fees and for some reason wouldn't allow me to just upgrade my old card).    My credit score dropped big time with transunion.    Transunion and equifax  were usually within five points of each other and around 830 to 840.

 

I noticed my equifax score is 823, which is fine but my Transunion score is only 798.   I've never had more than a five point difference between the two bureaus before.   Weird

[+ BenjaminNicholas]

2 hours ago, handiacefailure said:

I opened a new account with PNC recently and closed the other account with them (they have a new Visa that gives a better cash back with no foreign fees and for some reason wouldn't allow me to just upgrade my old card).    My credit score dropped big time with transunion.    Transunion and equifax  were usually within five points of each other and around 830 to 840.

I noticed my equifax score is 823, which is fine but my Transunion score is only 798.   I've never had more than a five point difference between the two bureaus before.   Weird

You closed a longstanding account.  That's going to happen.

And not all of the big three keep up concurrently.  Eventually, they'll all catch up, take a dip and then even out with new history.

[chitownguy]

16 hours ago, handiacefailure said:

I opened a new account with PNC recently and closed the other account with them (they have a new Visa that gives a better cash back with no foreign fees and for some reason wouldn't allow me to just upgrade my old card).    My credit score dropped big time with transunion.    Transunion and equifax  were usually within five points of each other and around 830 to 840.

 

I noticed my equifax score is 823, which is fine but my Transunion score is only 798.   I've never had more than a five point difference between the two bureaus before.   Weird

The average age of your open accounts is one factor in computing your score.  So closing an account will lower it.  Another factor affecting it is your credit use percentage.  If the new card has a significantly lower credit limit then the old card that also will negatively impact your score.

[+ PhileasFogg]

I’m a score junky although I don’t borrow money (but may under the right situation)

I keep my score in the 840’s by paying off my cards 2-3 times per month.  

The effect of a closed account like JC Penny will fade quickly.  The 20 point drop is a reaction on the assumption that you defaulted.  Does JC Penny even still exist?

[+ sniper]

As someone who works with models, I can tell you they simply are NOT that precise and there will always be some things where a change in the inputs will have a counterintuitive effect on the score. 

[+ PhileasFogg]

On 8/19/2024 at 2:43 PM, PhileasFogg said:

I’m a score junky although I don’t borrow money (but may under the right situation)

I keep my score in the 840’s by paying off my cards 2-3 times per month.  

The effect of a closed account like JC Penny will fade quickly.  The 20 point drop is a reaction on the assumption that you defaulted.  Does JC Penny even still exist?

It’s crazy!  I retired several months ago.   This month, after 6 months with no “income,” my score hit 850 on all three reporting company’s.   But, because I now have no “income,”  I bet I couldn’t even get a car loan despite having plenty of assets.  

[+ BenjaminNicholas]

10 hours ago, PhileasFogg said:

It’s crazy!  I retired several months ago.   This month, after 6 months with no “income,” my score hit 850 on all three reporting company’s.   But, because I now have no “income,”  I bet I couldn’t even get a car loan despite having plenty of assets.  

If you have assets on paper that are somehow verifiable, you can easily get a car loan/lease.  Same with a home.

[MikeThomas]

I just don’t get all the anxiety over fluctuations in credit scores.  The ones we can see aren’t even the ones the banks use to make lending decisions.