Why Your Credit Score Isn’t Increasing

Short answer, the reason why your credit score is not increasing is something that you have probably never heard of called “Scorecard hopping.” Let’s say you have been working diligently to get a small medical collection deleted and you finally get the collection agency to write you a “pay for delete” letter. After a few weeks you check your credit, expecting an increase in your score, and instead see that while the collection is gone, your score has gone down! How is that possible since it was the only collection you had? Welcome to the world of “scorecard hopping.”

Every credit-scoring model is comprised of a series of “scorecards.” These cards evaluate different aspects of your credit and turn them into points that become your credit score. Every scoring model has its own certain sets of scorecards. Scorecards group “like” consumer populations together and then evaluates them separately. For example, there is a scorecard for consumers with bankruptcies, one for late payments, one for amount of revolving debt, one for thin files, etc., the list goes on and on seemingly forever.

In the case of our example of getting the collection removed yet the scores dropped, there could be many factors in play. Let’s say the collection was several years old and it was the only collection on the report. That person may have been at the top of the collection scorecard. When it came off they hopped to a different score card where other factors carry more weight. They may have a few credit cards with high balances, so they jumped from the top of one scorecard to the bottom of another scorecard that looks more at revolving balances. Thus the drop in the score. So now, the consumer pays down some of the revolving debt. They wait a month, check their credit and again no or very little increase in the score. They do have several old late payments but those are old so that should not matter, right? Wrong. Now that the balances have been paid down, they moved up that scorecard but they hopped to another scorecard that focuses more on late payments. Late payments will affect scores for the entire seven years they are there. Although the effect does lessen over time. On a positive note if you have older late payments, as more consumers “hop” to this scorecard with newer late payments, the higher up the scorecard you will go.

Still, even when you feel like you are doing all the right things, it can be a vicious cycle of hopping from one scorecard to the next, and a person can jump scorecards literally on a daily basis. What is equally as frustrating is that a consumer does not know when this has happened and it is not something that is super obvious when you look at the credit report.

There is one thing to look at that will at least give the consumer a clue as to whether they have jumped scorecards. That is to look at the “score factors” on the credit report. Those are the four or five short comments underneath the actual score. These are in order of importance and each one carries a different point valuation. The combination of those points is what makes up your credit score. For example, if the first score factor listed is regarding derogatory information, and then a few weeks later the first score factor is regarding revolving debt, you know that you have jumped scorecards. Anytime those factors change or move even a little it can mean you have jumped scorecards and that can have a huge impact on your score, one direction or the other.

So why have scorecards at all? If there were not scorecards then people with “perfect” credit and long histories would always have the top scores. People with any deviation from that would always have low scores. With different scorecards, everyone is given the chance to better their scores. A person with “perfect” scores may simply have too many installment loans or mortgages, even though they have no late payments or high revolving balances. They would then hop to a scorecard that looked more at those parameters and the scores could drop some just due to the number of loans they have.

Each scorecard also has its own score range. While the FICO scoring range in 350-850, different scorecards have their own range. A person with collections and recent late payments is not going to have a high score so the range on those scorecards is less. To make it a little more confusing, each bureau has their own set of scorecards for each model. This is why we can see a big variation in scores from one bureau to the next.

Bottom line: don’t worry about which scorecard you are on currently. The scores will always change. As you work on improving your scores, you will continue to hop from one scorecard to another. As late payments and collections fall off and balances go down, over time you will consistently rise in the scorecard you are currently in and jump to new scorecards, which can eventually help your scores rise.