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What Makes a Credit Score Rise or Fall?

Posted on December 15, 2018 by Denver Mallick

Our financial decisions can affect to your credit rating in surprising ways. Two credit-scoring simulators can help consumers understand the possible impact.

The Fair Isaac Company, which puts out the industry-standard CREDIT scores, offers the myFICO simulator. Someone with a score of 707 (considered good) and three credit cards will be likely to add or lose factors from his score by making different financial moves. Following are some illustrations:

  • By making timely payments upon all his accounts over the the following month or by paying off a third from the balance on his cards, he could include as many as 20 points.
  • By declining to make this month's payments in the loans, he could lose 75 in order to 125 points.
  • By using all the credit available on his three bank cards, he could lose 20 to seventy points.
  • By getting a fourth cards, depending on the status of his additional debts, he could add or drop up to 10 points.
  • By combining his credit card debt into a new cards, also depending on other debts, can add or lose 15 factors.
  • The other simulator, the What-If, originates from CreditXpert, which designs credit administration tools and puts out its own, comparable credit score. A consumer with a score associated with 727 points (also considered good) would be likely to have her rating change in the following ways:

  • Every time she simply applied for that loan, whether a credit card, home mortgage or car loan, she would lose five points. (An active appetite for credit, credit score experts note, is considered a bad indication. For one thing, taking on new loans could make borrowers less likely to repay their present debts. )
  • By getting a home loan, she would lose two points.
  • By getting an auto loan or a new bank card (assuming that she already provides several cards) she would lose 3 points.
  • If her new charge card had a credit limit of $20, 500 or more, she would lose four factors, instead of three. (For every 10 dollars, 000 added to the limit, the particular score drops a point. )
  • By simultaneously getting a new mortgage, car loan and credit card, she would lose 7 or eight points.