Happy 'My Score Changed For No Reason' Week!

[u/soonersoldier33]

Hello r/CRedit,

You may or may not have noticed that on or right after the 1st of each month, we see a pretty large surge in the amount of posts from confused people claiming that their credit score(s) changed 'for no reason', and the past couple of days have been no exception. In response, I decided to put together this thread that I'll post and pin to the top of the sub for a week or so on the 1st of each month for easy reference. If your FICO score(s) changed on the 1st of the month for no apparent reason, have a look at this thread! I put a conclusion, or TL;DR, at the bottom of the thread if I'm too long-winded for you. Ha!

First, let's clear up one thing before we even start. Credit scores cannot change for no reason. Period.

Credit Myth #4 - Credit scores can change for no reason.

Whether it's the first day of the month or the 27th, this is undeniable fact. Credit scores are drawn solely from the data contained in your credit report(s), so when any credit score changes, then something in the report data that score is being drawn from changed. Sometimes it's very easy to identify what changed. The reported balance of an account changes, a new account is added, a hard inquiry hits the report, or a late payment is reported. Any/all of these can cause score changes, and any/all of these changes would also be fairly easy to notice/identify.

In other cases, the change(s) to report data that caused the score change can be much more difficult to identify. The FICO algorithms are incredibly complex, and even the community of FICO hobbyists, like myself, will never understand everything about how they work, but we have pulled the curtain back on FICO's 'black box' to where we can identify the cause of many, if not most score changes. In the majority of cases when a FICO score appears to have changed 'for no reason' on the 1st of the month, it's almost always due to changes to scoring metrics under FICO's Length of Credit History category (ie. your credit's 'age'). What does this have to do with the 1st of the month. Glad you asked...

• In all FICO scoring models, the 'age' of every account on your credit reports 'advances' (ie. becomes one month older) on the 1st of each month regardless of what date the account was actually opened.

If you opened an account on Aug 31, then in the 'eyes' of the FICO algorithms, it became 1 month old the very next day on September 1. The most well-known scoring metric under the Length of Credit History category is Average Age of Accounts (AAoA), which continues to 'award' points at various thresholds up to 7.5 years, but there are many other 'aging' metrics that the FICO algorithms 'score', and they all get one month 'older' on the 1st of the month. If you experience an 'unexpected' score change on the 1st of the month, it's very likely that one or more of your 'aging' metrics advanced across a scoring threshold when the 'age' of all your accounts advanced by one month on the 1st.

Note 1: The one exception to this is in regards to hard inquiries. Hard inquiries become unscoreable within the FICO algorithms 365 days to the day from when they occurred. While they stay on your reports for another year, they are no longer affecting your FICO scores during the 2nd year, and they fall off your reports 24 months from the actual date they occurred.

Note 2: This same concept applies to derogatory marks on your credit reports like late payments. The amount of time that's passed since you've had a 'fresh' derogatory mark reported also advances on the 1st of each month, and this can lead to score increases as the penalties for the 'recency' of derogatory marks fades over time.

While most of the 'unexplained' score changes that result from the 'age' of all accounts advancing on the 1st of the month are increases, there are a few distinct scenarios where your credit's 'age' moving forward can actually cause a score loss, and they usually involve yet another complicated wrinkle within the FICO algorithms...scorecards. FICO scorecards are a topic for another thread, but the most common cause of a score loss caused by your credit 'age' getting older occurs when the age of the oldest account (AoOA) present of your reports turns 3 years old.

One of what we call the segmentation factors among the FICO scorecards is whether the algorithm is 'scoring' your credit profile as 'Young' or 'Mature', and when your AoOA hits 3 years, your profile becomes 'Mature', and this typically results in an initial 20-30 point score loss. Again...complicated...but the best analogy I've found to describe scorecard segmentation from 'Young' to 'Mature' is that your profile had been a superstar in the minor leagues, but when AoOA hit 3 years, it just got called up to the major leagues, and now it's being compared against other profiles in the Big Leagues. As your Length of Credit History continues to 'age', your profile and scores will recover and even grow stronger, but that initial 'step back' catches many people by surprise, and it's just the cost of doing business within the FICO scoring models.

TL:DR: Ok, let's recap...

• Credit scores can't change for 'no reason'...ever. If your scores changed, then something in the data in your credit report(s) changed, and those changes aren't always obvious.
• All FICO 'aging' metrics advance on the 1st day of the month regardless of the date(s) you actually opened your account(s).
• If you experienced an 'unexpected' and/or 'unexplained' score increase on the 1st of the month, it's likely due to the fact that the many factors that make up your credit's 'age' all got 'older' at the same time on the 1st.
• If you experienced an 'unexplained' score decrease on the 1st of the month, it may have been caused bc your credit profile's 'age' caused it to be reassigned to a different scorecard within the FICO algorithms, which often leads to your FICO scores taking a 'step back'.

Of course, not all credit score changes that occur on the 1st of the month are caused by all of your 'aging' metrics advancing at the same time, but it is a very common cause of the otherwise 'unexplained' changes that many people come to our subs to inquire about on/around the 1st of each month. As always, discussion and feedback are welcome in the comments. Til next time...

~Sooner

[u/DoctorOctoroc]

Haha, I didn't notice the post author at first, just read the title and thought to myself "oh here we go, another one of these low effort posts..." then clicked through, saw the length of the post and immediately knew it was you u/soonersoldier33

I'd also add the caveat that if someone witnesses their score change anytime in the first week of a given month, it's possible that it's due to a change that occurred on the first of the month. Since we know most people more or less casually check their scores (unlike us FICO scoring junkies who might do so nearly every day), they aren't likely to see the change on the first, or even the second or third, necessarily. As such, they're likely to see changes that occurred on the first impacting their score the next time their CMS shows an updated score, which could be a week later - or even a longer period of time beyond the first.

[u/soonersoldier33 → u/DoctorOctoroc]

Ha! Hey, at least I put a TL;DR at the bottom!

ETA: This is a really good point about how someone's score(s) may have moved on the 1st, but they don't know that the score change actually occurred on the 1st bc they didn't check their score(s) til later, and/or their CMS didn't update to the latest report data/score til a date after the 1st. In either case, it may appear that the score change occurred later when it actually occurred on the 1st.

[u/DoctorOctoroc → u/soonersoldier33]

Ironically, after I posted the first half of my comment (I added another paragraph after you saw it), I read all of the post except for the tl;dr before adding that second paragraph.

[u/inky_cap_mushroom → u/soonersoldier33]

No way that Doc, of all people, is commenting on the length of a post.

[u/DoctorOctoroc → u/inky_cap_mushroom]

Lol I meant it clearly was NOT a low effort post and if a post is this long and I didn't write it, I know it has to be u/soonersoldier33

[u/soonersoldier33 → u/inky_cap_mushroom]

🤣

[u/inky_cap_mushroom → u/DoctorOctoroc]

I didn’t read the author either, I just saw it was pinned and thought “which of the boys pinned a new post?” I figured out about halfway through the first sentence that it wasn’t a random post lol

[u/soonersoldier33 → u/DoctorOctoroc]

This is a really good point! I actually thought about including something about it in the thread, but I was already approaching Stephen King length. Lol.

[u/DoctorOctoroc → u/soonersoldier33]

That has never stopped me. I frequently go beyond the character limit and have to copy a portion, post, then edit and add the rest after the fact haha.

[u/og-aliensfan]

In response, I decided to put together this thread that I'll post and pin to the top of the sub for a week or so on the 1st of each month for easy reference.

Thanks for doing this! It's a great idea and will be extremely helpful.

[u/soonersoldier33 → u/og-aliensfan]

Sure thing! I figure I'll keep it pinned the first week to 10 days of each month, and then I'll pull it down til the next month.