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Credit Score Fluctuation

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Mark Cappel
UpdatedSep 11, 2009
Key Takeaways:
  • Five key factors that go into calculating your credit score

A credit card company made an error in crediting a payment. How long will it take for my credit score to recover?

A credit card company made an error in crediting a payment, and as a consequence we had a negative remark that lowered our credit score 8 points. I had them fix it and score has not gone back up. Why? This hit our credit the day before we were planning to get pre-approved for house, the 8 points it lowered us put us below the score we need to get approved for a house. How long will it take to get back up 8 points? And why has it not gone up now that it is fixed?

No one can truthfully say for certain when or why small fluctuations occur on a credit score, or what actions will cause a small upward change to occur or when. The calculation is something of a black box, and the calculations occur every 60 days or so. As a result, you may not see a bump to your score until two months after the correction was made.

Let me explain a little more how your credit score is calculated. Your credit rating is calculated based on several variables, including:

1) Payment history, which counts for approximately 35% of your score, is the most heavily weighted factor used in calculating your credit score. Consistently paying your bills on time has a positive influence on your score, while late or missed payments will hurt you in this area. If you have delinquent payments, the older the delinquency the less the negative impact on your score will be. Collection accounts and bankruptcy filings are also taken into consideration when analyzing your payment history.

2) Total debt and total available credit, which counts for about 30%. This section looks at how much debt you have compared to the total available credit on your accounts. If all of your accounts are maxed out, you will be considered a poor credit risk, because it appears that you are struggling to pay off the debt you have already incurred. If your account balances are relatively low compared to your available credit, this part of the risk analysis should help your overall credit score.

The score calculation also looks at these two factors independently. Having too much available credit, whether you have used it or not, could hurt your credit score, as statistical studies have shown that people with excessive amounts of available credit are a higher credit risk. Unfortunately, the bureaus do not define exactly what they consider excessive, so best tip is to use credit conservatively and to keep your debt to credit limit ratio low.

3) Length of positive credit history, which counts for about 15%. The longer you maintain accounts in good standing, the better your score will be. This shows that you are able to make a long-term commitment to a creditor and are consistently responsible about making your payments. If you have accounts with long history (5 or more years) and no missed payments, you should keep these open and paid off.

4) Mix of types of credit, which counts for approximately 10%. Having several different types of credit, such a credit cards, consumer loans, and secured debt, will have a positive influence on your credit score. Having too much of one type of credit can have a negative impact.

5) The number of new credit applications you have recently completed, which accounts for about 10% of your score. Applying for too much new credit in a short time period makes indicates that you could be credit risk, as you may be desperately trying to keep your head above water. The models make an exception for people who are shopping around for a loan, so if you are simply applying to see who can give you the best rate on a new loan, you need not worry too much about damaging your credit score.

If you would like to learn more about credit reports, credit scoring, and what it means to you, I encourage you to explore the wealth of credit score information offered by

I hope this information helps you Find. Learn & Save.



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