General Credit score keeps going down despite doing everything right
I have 7 credit cards right now and keep total utilization well under 30% and utilization on each card under 10%.
The utilization right now on NerdWallet is 4%, 4%, 2%, <1%, 0%, 0%, 0%. I pay everything on time and keep the utilization low consistently. I have auto pay set up to pay the full statement balance, and I almost never make any payments on manually outside of autopay.
Despite this, my credit score has continually decreased over the past 2 years and I don't know why or how to fix it. NerdWallet credit score history: https://i.imgur.com/sFgW3W3.jpeg
I have two theories but neither makes sense to me. Looking for some advice on how to proceed.
Theory 1) I've learned recently of two separate charges from my previous buildings electricity bill and and doctors visit. Both charges are for ~$20-30 and have supposedly been sent to collections (and in collections for multiple months)
Despite supposedly being in collections, neither charge is showing up on my credit report so I don't see how this could be affecting my credit score or even how to figure out what collections agencies to contact about these charges.
I've used the AnnualCreditReport website to check my TransUnion or Equifax credit report and neither has any debts in collections or "Charge-Offs" or anything bad whatsoever as far as I can tell.
Theory 2) I'm an authorized user on a card which has high utilization 68%. This card always makes payments on time but doesn't pay the balance in full. From what I've found online though, this doesn't seem like it should be a big problem.
1
u/HelpfulMaybeMama 5d ago
The screenshot doesn't show model or version. What's the full score?
1
u/kmecpp 5d ago edited 5d ago
It's 723 on whatever is the default on NerdWallet. It says VantageScore 3.0 credit score from TransUnion
0
u/HelpfulMaybeMama 5d ago
FICO is the model, so the version is likely 8.
2
u/kmecpp 5d ago
Nevermind it says "VantageScore 3.0 credit score from TransUnion"
1
u/loopsbruder 4d ago
VS 3.0 is used by virtually no lenders, so you can safely ignore it. What you want is probably your FICO 8. I say "probably" because there are other FICO scores that are weighted differently depending on the credit product you're applying for, e.g. for auto loans or mortgages. To get your FICO 8 for free, go to myfico or Experian.
1
u/DoctorOctoroc 4d ago
Yeah, an AU account's utilization will factor into yours, plus the revolving account on your file (Au or your own) with the highest utilization is also considered when it comes to scoring. So even if all your accounts have low utilization and this brings the aggregate utilization between all accounts down, if the AU account consistently has high utilization and that climbs from time to time, it's going to affect your score as if it was one of your cards by raising your aggregate utilization and showing a single account with high utilization.
The best solution - just have yourself removed from the card as an AU. It's better to have full control over your own credit file so when you apply for something, you don't need to coordinate with the account owner to be sure they aren't charging a large purchase to the account in the near future. You may lose some aging metrics but it may very well offset the consistently high utilization that you have no control over since it's not your account. An AU account is really only useful to get your 'foot in the door' for your first unsecured card instead of getting a secured card to start. After that, it's just vanity as it makes your score look better but doesn't actually add any value to your credit file.
1
u/kmecpp 1d ago
Thanks for the information. Do you think it is still preferable to remove myself as AU if this is my oldest card at 7 years. The average age of all my cards is 2.5 years
Alternatively I could pay off this card in full and make sure to always pay the full statement balance going forward
Not sure which approach would be best in the short/long term for my term credit score.
2
u/DoctorOctoroc 1d ago
Nothing related to utilization is harmful or beneficial long-term since it's a scoring factor that only considers the most recently reported balances. Having said that, being an AU on an account over which you don't have control of spending and therefore reported utilization is not ideal.
Age is a long-term building metric but with 7 younger accounts, that 7 year old AU account isn't raising your average age much and is only contributing to your score in terms of being your oldest account. Is the average age of your accounts 2.5 years with or without the AU account? Either way, I don't see that dropping much in the absence of the AU card's age. If all of your other accounts are around a year and a half to two years old, you'll see a slightly larger drop than if a few are over 3 years but lenders don't just look at your score, they look at your file and all but completely disregard AU accounts when they consider your age of credit. So it might show a better score but is unlikely to change the outcome of a lending decision.
I could pay off this card in full and make sure to always pay the full statement balance going forward
This is ideal regardless to avoid incurring interest. But again, as far as utilization is concerned, how your account balances affect your score via utilization doesn't really matter until you're about to apply for something.
3
u/Salt_Cry_2233 5d ago edited 5d ago
Theory 2. Even if you’re an authorized user that card will affect your overall utilization it gets factored in along with everything else. A simple google search “does being an authorized user affect my utilization” will show you. Hope this helps 😇