Credit Scores: Why Do The Numbers Change?
Question: My credit score was 670 a month ago, now it’s 650. What happened?
Answer: Credit scores can be seen as pictures which show your credit standing at one point in time. At any other point in time the picture may be different.
Actually, it would be amazing if credit scores did not change — that would suggest a total lack of financial activities, an unlikely situation.
What have you bought in the past month that would increase your credit debt? Have you missed a payment? Been at least 30 days late?
Or, by any chance has your credit card company reduced your credit limit? This could reduce your credit score. For instance, imagine that you owe $3,000 on a credit card with a $10,000 limit. You are using 30 percent of your available credit on that card. If the limit is reduced to $5,000 you are now using 60% of your available credit, and that higher percentage could lower your credit score.
If you’re buying a home, have a mortgage locked in and are waiting for settlement, do nothing that would change your financial picture. Why? Because just before closing the lender will again look at your credit report. If something has changed a red flag may go up. Thus, put off credit purchases until closing is finishing and the transfer of title has been added to local records.
Syndicated originally by Content That Works and posted with permission.
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