EDUCATION BLOG

Why does my credit score fluctuate and why is it always different?


The first thing to remember is that the credit reporting agencies generate your credit score based on information that they have gathered from the creditors that you have done business with. The second thing is that they only report what they have received from them. All of the items that report on your bureau have different levels of importance. An example would be that someone got married and changed their name. That is in itself important in order to accurately report current and continuous credit to your file, however it does not affect your overall score. The following items are what cause you're credit score to change/fluctuate. 1. Maxing out a credit card: this is the single handedly greatest catastrophe that you can do to your score. I have seen a score decrease 150 points because of credit mismanagement. The worst part... Nothing negative actually took place. They spent money they were allowed to spend and agreed to repay! If you were to ignore a credit card bill completely for 31 days past the due date yours score may only go down 30-60 points! A bankruptcy could cause your credit to only go down 50-200 points depending on any charge offs associated. That is absolutely ridiculous.

2. A missed payment. If you lost a payment reminder because you were on vacation and do not get the payment in by the 30th day that it was due that can be a reason for suffering credit decline.

3. An authorized user charged your card and did not notify you! With online bill pay and auto pay etc... It is easy to let time slip by without thinking to check your debts. As a matter of fact i have missed an energy bill because the reminder went to my junk email! $10 late fee... Lesson learned.

4. Unpaid utility bill, cell phone bill, toll tag bill. Any of these and many more will affect your credit if not handled in a timely manner.

5. Different companies pull different bureaus: example insurance companies have their own formula; car dealers and auto financing companies "banks" all pull something different. Everyone has different criteria for what they consider good, bad, excellent, etc. Most mortgage loans average all three bureaus but which profile? Who knows.

6. Using your credit card responsibly causes your score to go down... Example: debtors only report once per month, and they are all at different times. I use my blue cash amex for rewards points and pay it off every month when notified that it is due, however anytime my credit is pulled it shows that i still owe the debt. So it always shows i owe money even when it is paid off! When you owe money it decreases your available credit and debt percentage which in turn affects your score.

7. Owing more than 25% of your available balance lowers your credit score, increase that to 35% and you lose more points... Try 50% and you can look at a score that was hit so hard you may be automatically declined on any other purchases.

8. I have heard people say for years... And i cant tell you how many times... "Charge your credit card up (max it out) and pay it down to build credit." Well that is false. Credit cards are considered revolving accounts and the creditors do not report how many or how much your paid payments are. Here is All they report: a) how long the account has been open b) what your total credit limit is c) how much you owe d) late payment history. What these credit coaches might be thinking about are called installment loans... They show a debt borrowed, monthly payments, debt still owed and payment history. If you listen to them and max your credit out, you will be sorry to know that you just lost a lot of points off of your credit score.

9. Co signer on any sort of loan. Usually if a friend/family member needs help buying something, you usually don't live together and you will not receive notification of a late payment until it is too late. Surprise back debt on a co sign loan can be a silent assassin to your good faith and credit score! You are 100% responsible even if 50% on the loan, whether you consider the borrowed money your debt or not. Think twice before you ink up on someone else's debt. The bottom line is to keep a clean, up to date and accurate credit profile. No one can argue that, no matter which program or industry you are in. If you have more questions or would like help with your credit score then please reach out to me and schedule a time to talk. I would love to be your credit repair specialist.


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