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I haven't done a credit score checkup post in quite awhile. Although I check my credit reports monthly to make sure there are no errors, I haven't checked my credit scores since April and that was because I was looking to refinance my adjustable rate home loan. I wanted to make sure my scores were good enough to obtain the best interest rates available since I knew the decrease in my home value would be one of the factors hindering the loan approval.
One of my ongoing and not often mentioned financial goals is to get and maintain credit scores of 720 and above with all three credit bureaus. When I checked my scores in April, all three bureaus were showing scores over 720!!!
When I checked my scores last week, there was an unexplained drop in 2 of my scores. I know that my new home loan is showing up on my credit report now and new accounts usually drop your scores temporarily by a few points; but not over 30 points.
How are my scores looking right now?
- 758 on 4/12/2009
- 765 on 9/3/2009
- I'm pretty happy with my Equifax score. Most lenders in my area pull Equifax.
- 734 on 4/12/2009
- 688 on 9/3/2009
- I don't know what happened here. A drop of over 40 points for a new home loan? I've been checking my credit report and there hasn't been any negative information added. I'll have to keep an eye on this.
- 721 on 4/12/2009
- 685 on 9/3/2009
- This is always the lowest score for me. I still don't understand the sudden decrease.
How do you get and maintain a good credit score?
Timely Bill Payment. This is 35% of your credit score. Having a late payment reported can send your credit score into a downward spiral. A late payment can stay on your report for up to 7 years.
Credit Mix. This is 10% of your credit score. Having a good mix of installment loans, credit cards and mortgages is good for your credit score. This is really important if you have a short credit history. Obviously, you should not apply for new credit just to have different types of credit if you don't need it. This will actually hurt your credit in the short term.
Debt to Credit Ratio. This is 30% of your credit score. The closer you are to maxing out your amount of available credit, the more negative the impact to your credit score.
Length of Credit History. This is 15% of your credit score and is something that simply improves with age. The oldest credit line on my credit report is over 13 years old.
New Credit. This is 10% of your credit score. Every time you apply for new credit, the lender checks your credit score. This causes an "inquiry" on your credit report and can decrease your score 2-3 points. Multiple inquires in a short amount of time can also send your credit score into a downward spiral. Shopping for a mortgage or car loan is considered as one inquiry if done within a 30 day time period.
How do I check my credit reports?
I use Equifax Credit Watch Gold (affiliate) which tracks all 3 credit bureaus and alerts you to any changes within 24 hours.