Why Did my Credit Score Tank? Analyzing Credit Karma and Credit Sesame for Answers

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CS Tanking

Why Did my Credit Score Tank?  Analyzing Credit Karma and Credit Sesame for Answers

Like every good points and miles junkie, I check my credit score with Credit Karma and Credit Sesame at least once a month.  My credit score is the magic key to getting hundreds of thousands of points and miles each year from credit card sign up bonuses.  Without a good/excellent credit score, I would not be approved for many of the best offers out there, so I try to take very good care of my credit score.  If you are unfamiliar with Credit Karma or Credit Sesame, please read my tutorial page.

Today, I logged into my Credit Sesame account and saw the above picture.  A drop of 18 points is strange since I didn’t do anything to deserve the drop.  I didn’t:

  • Apply for a new credit card(s)
  • Close an existing credit card
  • Lower my credit limit
  • Forget to pay a credit card bill
  • Apply for a car loan or mortgage

I still couldn’t figure out why my score dropped, so I had to do some research.  

I looked at Credit Sesame’s credit analysis but it did not tell me anything.

Credit Analysis

I looked at Credit Sesame’s credit monitoring alerts, but didn’t see anything wrong there.

Credit Monitoring Alerts

I wanted to get a second opinion, so I logged into my Credit Karma account to see if I could figure out what happened.  Here is my Credit Karma credit report card.

Credit Report Card

If you read the above Credit Karma and Credit Sesame page, I explain what each category means.  Believe it or not, the “F Age of Credit History” has been that score for a very long time, so that didn’t surprise me.  Since I apply for a lot of new credit cards, my average age of credit card accounts has always been low.  I am working on keeping cards longer, but I think this will take a very long time (many years) to get to an A range.

Age of Credit History

Anyways, this is what I think the problem is.  My credit card utilization ratio is too low.  In fact, Credit Karma says I am using 0% of my available credit.  Some how, 0% is a bad number and subsequently decreases my credit score.  I thought I was doing the right thing by paying off my bills early before the statement closes each month.  But I guess not.

Credit Card Utilization Rating

This line graph illustrates my credit card utilization ratio over the last few months.  As you can see, I have an extremely low ratio since I have always paid off my balances before the statement closes.

Credit Card Utilization Tracking

Lastly, this bar graph shows that I am not alone.  10% of Credit Karma users fall into the same category as me.

Credit Utilization Ratio Comparison

So, the moral of the story appears to be: do not pay off your entire balance before your statement closes.  To test my hypothesis, I will leave around $10 on each of my credit cards so when the statement closes, that small balance will increase my credit utilization ratio.  I have quite a few credit cards, so I am curious what this will do to my credit score.

Do you have any suggestions or answers for me?  If you have any questions, please leave a comment below.


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17 thoughts on “Why Did my Credit Score Tank? Analyzing Credit Karma and Credit Sesame for Answers

  1. DJ

    I’m in the same boat and was just talking to miles/points friends about this tonight. I’m curious to see a follow up post from you on this in a few weeks.

    Reply
    1. Grant

      You got it DJ, 90% of my credit card statements close at the beginning of the month, so I hope my score improves in a few weeks. I guess you are in that 10% group with me on Credit Karma :)

      Reply
  2. Andrew Ishikawa

    Bad Idea….Most cards will charge you finance charges on your entire next months balance if you carry forward a balance. A better tactic would be to schedule payments automatically after the statement date.

    Reply
    1. Grant

      I’m not talking about carry a balance and paying interest, I am talking about paying off my balance AFTER my statement closes, not BEFORE it closes.

      Reply
    1. Grant

      I’m not like most people, I like logging into my credit card accounts and paying off all my charges as soon as they show up online. I like seeing $0.00 balances on all my cards. It will be tough for me to switch to the “normal” way of paying credit card bills.

      Reply
  3. TTN

    Grant, you’re not “normal”. LOL I pay my balance off the same day I receive the statement. I still like to get paper copies. Easier for me to keep track than email notices that are lost in my inbox.

    Reply
  4. Scott

    I noticed the same thing, 0% is a bad thing? So I started letting it wait until the statement posted instead of paying off early. Now I show 1 to 3%.

    Reply
  5. charles alan satterwhite

    I’m in the golden A range.. On the balance section anyways i mirror you in almost every other way… my answer 0% interest. I have mine invested in stocks because I want some gains and am earning decent money so could afford the loss. But take out like 5k on a card that has 0% interest for like 18 months put it into a CD earning 1% make 75 bucks and have a higher score…

    Reply
  6. Kiki

    I also pay early. Iam wondering if having authorized users and /or being AU affects my score. Mine went down 33pts when I started this in June. Luckily, it was 820 to start.

    Reply
    1. Grant

      I am keeping $5-$10 on all of my cards until the statements close and will see if my score shoots back up. You have a great credit score, I am jealous.

      Reply

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