National Assn. of Realtors wants FICO credit scoring model revised

This is an scenario on you how your credit score can change, even if you did nothing.  This assumes your credit score starts in the 750's.

Suddenly you get a notice from the bank that because of "market conditions," your equity line limit has been cut from $60,000 to $35,000, slightly above the $30,000 balance you've got outstanding. Then one of your credit card issuers hits you with more bad news: Your $20,000 limit has been reduced to $10,000. Your balance on the card, meanwhile, is about $9,000.

What happens to your credit scores in the wake of the bank cuts? You might assume that nothing happens; you haven't been late, you haven't missed a monthly payment. You're a good customer.

Wrong. Depending upon your overall financial situation, your credit scores could plunge into the upper 600s. This in turn could put you out of reach for a refinancing at a favorable interest rate or hamper your ability to buy a new home and sell your current one.

And the solution.

In a major policy move, the realty association is calling upon Fair Isaac to "amend its formulas to avoid harming consumers whose utilization rates increase because their available lines of credit" are reduced despite on-time payment histories. The group wants FICO to either ignore the utilization rate altogether for such.

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