Strange credit reports

harriethomeownerAugust 29, 2011

We discovered, in applying for a refinance of our mortgage, that our credit reports went from the 800s (since the last time we refinanced, in 2007) to the 700s, and all three agencies list one factor that adversely affected our scores as "Too many inquiries last 12 months." How can this be? We haven't applied for new credit anywhere before this. We get quite a few unsolicited offers in the mail -- and shred them. I've called to get these things to stop in the past, but I guess I need to do it again.

Also, all three agencies say "Proportion of balances to credit limits on bank/national revolving or other revolving accounts is too high, amount owed on revolving accounts is too high." Why would this be? DH and I each have one credit card that we use strictly as a convenience, never get anywhere near the limit on either card, and pay both of them off in full every month. We had a smallish HELOC balance but paid it off in full last year. That's it -- no other loans or use of credit.

How do you get them to take these things off of your history? It doesn't seem to be a problem in getting credit -- we've been approved by two different banks for this refi -- but it's really bothersome.

Contacting these agencies is a major pain. There is no way to just call. They all want you to sign up for a service -- for a fee, of course. It is such a racket. Does writing a letter help?

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graywings123

I had the same thing happen to me using the same reasons, completely invalid. I think that the credit companies have to justify their scoring, have a stock list of reasons they use, and these are the ones that even remotely apply to you or me.

    Bookmark   August 29, 2011 at 9:14AM
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Billl

"Proportion of balances to credit limits on bank/national revolving or other revolving accounts is too high"

This is entirely possible even if you plan to pay off the balance at the end of each month. They score based on what you owe at the moment they check and don't know whether you are planning to pay them off or not. That is one reason to have a multiple cards with high limits. If you use 1 card with a modest limit, you might be using a significant portion of your available credit by the end of a month.

"Too many inquiries last 12 months."

Call and ask. There are lots of reasons that someone might check a credit report beyond just getting a new loan.

    Bookmark   August 29, 2011 at 10:19AM
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sushipup1

I suspect that the recent inquiries are related to your refinancing. They don't just pull one credit report but monitor the reports, each looks like a new inquiry.

    Bookmark   August 29, 2011 at 11:00AM
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harriethomeowner

I pulled one of my free reports this morning. Everything on there is accurate -- it lists only the legitimate credit inquiries that I initiated (i.e., the ones I mentioned in my OP). Our CC balances never approach our limits -- we simply don't spend that much money on a regular basis. They must be "grading" everyone on much tougher standards than they did a few years ago is the only reason I can think of for the downgrade. It doesn't seem to pose any problem in a practical sense, since we're still in the "excellent" range -- it's just the principle of the thing!

    Bookmark   August 29, 2011 at 11:42AM
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feedingfrenzy

It isn't a question of getting close to your CC limits, but a question of what percentage of all your CC limits added together you've already tapped. According to current standards, it should be below 10% for a top credit rating.

As for the inquiries, did you happen to switch any of your cell phone, internet or TV services in the last year? Doing that will usually trigger an inquiry.

    Bookmark   August 29, 2011 at 1:35PM
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harriethomeowner

Actually, no. We just bought things with our credit cards and paid off the purchases in full when the bills were due each month. None of that stuff appears on the credit report I pulled. They must think two inquiries are too many now.

Some months we may close to spending 10% of our CC limit, but not most of the time.

Anyway, now that I've seen what's actually on the report, I don't see that there's anything we can do about it.

    Bookmark   August 29, 2011 at 2:34PM
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maifleur01

When the credit reports are pulled they reflex the amount owed on the day they are pulled. I questioned the credit balance problem was told that 10% was the cut off. 7% was more acceptible. The statement we received with our house insurance reflected the down grade of the credit score. Not much but considering the only debts we have are the house and my credit card.

Based on the above I would suggest to anyone who uses their credit card for their monthly expenses to either stop the practice or accept the down grade. Trends appear to be point to a return of paying everything with cash.

    Bookmark   August 29, 2011 at 9:31PM
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Billl

Don't just stop using your cards. It is counterproductive in term of your credit in the longrun.

Instead, about 60 days before you plan to apply for a loan, pay everything off and don't make new charges until the loan goes through.

    Bookmark   August 30, 2011 at 9:46AM
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feedingfrenzy

Or, if you normally pay them online, just make sure you keep the balances low by making frequent payments.

Billl is right in that not using your CCs at all is likely to cause the issuers to cancel them, which packs a triple whammey. Your score will take a hit when the bank cancels the card, and you'll also wind up with less total credit available, which is also bad for your score. It also means you'll have to keep your outstanding total credit balance to an even lower level.

To get top credit scores, you should have 3-5 open credit cards so that the total amount of credit available to you is large. Then you also need to make sure that the the total amount you have charged on all of them at any one time falls in the 6-10% range of what's available.

    Bookmark   August 30, 2011 at 10:58AM
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edselpdx

Lots of good advice/education over at the free forums at myfico.com. They will be able to help you sort out what the differences are.

    Bookmark   August 30, 2011 at 9:07PM
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harriethomeowner

I don't want to have a bunch of credit cards that I don't use. It's too confusing and problematic. The only reason we use credit cards is because it's convenient, and in many cases, that's the only way to do business (particularly with so much being online now).

I think it's ridiculous that people like DH and me, who are not in debt and who manage our money and credit carefully, would not have the highest possible credit ratings. We are not doing anything differently now than we were 4 years ago, when our ratings were higher -- except that our salaries AND savings have increased and our amount of debt (mortgage) has decreased. There's something wrong with that picture.

    Bookmark   August 31, 2011 at 1:56PM
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LuAnn_in_PA

In an earlier post you say:
"It doesn't seem to pose any problem in a practical sense, since we're still in the "excellent" range "

I don't see why excellent isn't good enough....

    Bookmark   August 31, 2011 at 2:39PM
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harriethomeowner

Yeah, I guess it should be, right? It just looks weird for the report to say "too many inquiries," "debt too high," and so on as the reason for our credit rating being lowered when those things have nothing to do with how we handle debt. It appears those lending money don't have a problem with it, either. So what's the point? Why do the agencies do this?

    Bookmark   August 31, 2011 at 3:11PM
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feedingfrenzy

Your credit rating has nothing to do with your salary, savings or mortgage balance.

    Bookmark   August 31, 2011 at 5:48PM
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edselpdx

Harriet-- FICO scores are like a video game. If you'd like to improve yours, you can. Sounds like yours are fine, so no worries. myfico does have very active community boards for anyone who wants to know more about FICO scoring, etc. You don't have to but anything, just look for "community" under the site map. I agree with feedingfrenzy; credit rating has nothing to do with salary, savings, or mortgage balance.

    Bookmark   August 31, 2011 at 9:50PM
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Billl

"It just looks weird for the report to say "too many inquiries," "debt too high," and so on as the reason for our credit rating being lowered when those things have nothing to do with how we handle debt. "

Huh? Of course those things matter - on average. That is what credit scores are - the average risk of people who display certain behaviors. People who apply for a lot of credit in a short period of time are bigger risks to lend to on average. People who use a lot of their credit lines are obviously bigger risks than people who only use a little - on average. Sure, you may intend to pay it off every month, but if you suddenly lose your job, the credit companies are a lot safer if you only have a small balance outstanding then if you had a large balance.

If you want to manipulate the credit scoring system, it really isn't that hard. Just adopt the patterns of people who they judge to be the lowest risks. If your score is currently good enough to get everything you need, why bother though?

    Bookmark   September 1, 2011 at 8:39AM
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joyfulguy

There's been a substantial financial squeeze in general in our part of the world, both governmental and private, in the past few years.

Plus, with the huge debt and the printing money issue, it's almost certain that there'll be higher interest rates soon, in addition to inflation.

Quite a few figure that the housing issue can go somewhat lower, with more people's mortgages quite possibly going underwater.

If you were running a credit card company, I'll bet that you'd be tightening up the system quite a lot, these days, too, Harriet homeowner.

ole joyful

    Bookmark   September 8, 2011 at 11:25PM
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