Credit score tanked and then bounced back?

[Ranger111]

Anyone know why? -- A Fluke?

Background:

Son had a rough time managing money just out of high school. Bounced checks, a couple of collection accounts, etc. Fast Forward 10 years and he has finally seen the light and been on the straight and narrow.

He has had a credit card for six months and his credit rating has slowly increased from poor to fair to good.

Except, TransUnion was a bit quirky. In August, his TransUnion FairIssacs clone number was 703 -- just into good.

In August, it dipped to 648, but there was nothing to justify that. No late payments, no bounced checks, etc. Now it is 706.

EquiFax also dropped from 691 to 685 and is now at 695 at the top of the fair range.

Again, nothing in his reports to indicate any issues. There was a hard pull on his report in June when he moved to a new apartment, but nothing else.

Anything anyone?

 

[MomToOne]

Hard pulls will lower it some. One of the larger factors is also the percentage of the open credit in your name that you are using - so say he had 1 credit card with a $1000 limit. If one month he had a 600 balance on it, and another only 100, the month with the 100 will be "better" because your utilization is only 10% instead of 60% the other month. This is true even if you pay it off each month and don't carry a balance - the credit card companies still report your balance that month.

I use credit cards for nearly everything but pay the balance off each month. But due to the nature of life, some months I charge more and some month less. I have an excellent credit score, and ridiculous credit lines so I don't have a high utilization percentage in even my "heavier" spending months, but it will swing 5-10 points some months, primarily because of that.

 

[disneychrista]

Mine will "swing" a little bit. But as the poster above said, if one month I have higher spending (car repair, dental, vacation) then my score will go down slightly. Then in a month or so when my spending goes back to normal it goes back up.

When I got a new car loan it went down 25 points but then went up higher than before within 6 months.

 

[tvguy]

Wow. I didn't realize people monitored their credit scores that frequently. I checked mine once, two years ago, just to see what was on it. It was very confusing.....I didn't know most of the creditors list there. I did recognize the mortgages and car loan amounts, but all the original lenders have been sold/merged out of existence and the new companies are listed.
We've always qualified for the lowest loan rates, so didn't see a need to be concerned, and I am at a point of my life that I don't ever expect to need a loan for anything again.

 

[nancygirl1]

A hard inquiry will temporarily lower your credit score. It will stay down if there's more than one inquiry, but with the one if there's no issues (i.e. denial of credit, etc.) then the score will bounce back up.

 

[disneychrista]

I check it because I figure....It's free so why not?

 

[gottalovepluto]

I'd say it's his credit utilization rate. If he has a small amount of credit available but makes a big purchase it will push his credit utilization rate up and that will bring his score down. And credit utilization can bring your score down 50 pts if there is a small amount of credit available. (If he has $20,000 in total available credit and has charges worth $2,000 his credit utilization rate at that time is 10%). When I had a small amount of credit available after college I would see large drops like that when I bought something expensive, booked a trip, etc. It doesn't matter that he'll pay it off in full on time. The score comes back almost as quickly as it drops.

 

[Ranger111]

OP again!

Thanks again, people.

I think you all have solved the problem!

He had to make some purchases on his credit card (which he paid off in full and on-time) after moving into the new place. Normally, he only puts some $30 a month on the card, but in July, he pushed the envelope, so credit utilization (which I had never heard of and just googled) seems the likely culprit!

And, there may have been some influence from the hard pull too (there was only one).

Man, they get you for everything nowadays

I am old enough to remember when you got a car loan because the bank loan officer knew you and thought you were responsible!

Again, thanks. It was a mystery to us.

He is wanting to buy a car and trying to build up his credit. So, he is using the free Credit Karma service to keep tabs. As soon as he gets to the 720 or so mark (or maybe sooner, knowing 28-year-old guys), he is going to start looking for a used car loan.

Can't blame him, it takes him nearly two hours to get to work via public transit -- and it is only about a 15 minute drive. So, that is four hours a day, vs. 30 minutes.

After two years, it has gotten pretty old for him.

 

[gottalovepluto]

...And, there may have been some influence from the hard pull too (there was only one)....

FWIW (I forget where I read it, but it was in the last few weeks) a hard pull should only result in a drop of 5 points maximum on a credit score.

 

[MillauFr]

Does it really matter unless you are applying for a big loan?

 

[MomToOne]

Does it really matter unless you are applying for a big loan?

Yes. Your credit score also affects things like car insurance rates, whether or not people will rent to you, and even whether or not some companies will offer you a job.

 

[Mackenzie Click-Mickelson]

Yes. Your credit score also affects things like car insurance rates, whether or not people will rent to you, and even whether or not some companies will offer you a job.

Ditto. It also affects home insurance rates.

Cell phone companies also use your credit too (moreso for fees they may assess you when signing up).

Some utility companies use your score too (moreso for fees they may assess you when signing up).

There are more that I'm not thinking of I'm sure.

 

[Malibustyle23]

He is wanting to buy a car and trying to build up his credit. So, he is using the free Credit Karma service to keep tabs. As soon as he gets to the 720 or so mark (or maybe sooner, knowing 28-year-old guys), he is going to start looking for a used car loan.

Just to let you know credit karma uses a vantage score and car dealers use your actual fico score. While credit karma is a good guide to use don't trust in it completely. His actual score could be much lower, higher or right there.