flickr: Misty
Today’s question comes from someone who was shocked to see that their credit score went down when we got her mortgage. The issue is that she thought that her score would improve, because one of the credit score factors is mixture of credit. It seems that the FICO credit score model suggests that having a mixture of credit helps your score. People with a mixture of credit are statistically less risky than people with just one type of credit.
So, why did her credit score go down?
Without seeing her report, I wouldn’t know for sure. But, I suspect a couple of things happened.
- First, she had an inquiry when she applied for the loan. That probably accounted for about a 10 point drop
- Second of all, she now has a new, very large tradeline — her loan. That probably caused a drop of several points as well.
How do I know this? Well, besides being an ex-FICO exec, the same thing happened to me.
Is there good news? Yes she’s likely going to see those points come back to her. She should see a 10+ point rise in the next few months and if she pays on time, she should see her credit score improve, and hopefully return to her previous mid-700 score.
Click Here to Get Great Rates And A Speedy Approval From Lending Tree Without Any Hassels.
Go to Source