Challenge credit report or check credit cards and average age of credit
Q: I had a credit score well over 800 and it is now in the 700 range. Not a bad score still, but I am looking to see why it has gotten lower over the last 5 to 7 years. I am concerned that if something is up, it will slip further. How can I challenge credit report?
A: I don't think anything is up with your credit report. Had it been a case, you would have likely seen much steeper decline, especially with the credit scores in the 800 range, as described in What affects credit score, according to FICO. The fact that has happened over a long period of time also implies that there is no need for you to challenge credit report. You need to simply review it and check for inaccuracies and missing information. But there is more to it.
Do you compare the same credit score types? For example, you have to compare FICO score with FICO score, not with the different model. See Repair credit score for the right type of loan.
Another thing you need to understand before you challenge credit report, is that even the same type of credit score can be calculated differently today than 7 years ago. Based on risk factors, a credit scoring algorithm evolves with time because different risks become more or less important, especially in the ongoing credit crisis, and correspondingly are counted more or less by the algorithm.
Have been you carrying credit card balances that are very high with respect to credit limits? You know, like those interest free offers that charge you no interest on purchases for up to 15 months. If you max out a credit card your revolving credit utilization factor goes very high and lowers credit score. While no-interest credit cards can be used very successfully, you need to understand the potential harm. Loading up three or four such cards would do quite a bit of damage. If this is the case, you need challenge you spending habits or stop worrying that much about your credit report. And you do not even need to max them out. As long as your utilization factor is over 60%, the negative credit score impact can be quite painful.
Finally, and I think that is the most probable cause of your credit score drop, average age of your credit history which some call length has become younger. Have you closed a few revolving credit accounts a while back, such as credit cards or home equity line of credit? When you close a credit card in good standing with a $0 balance, it falls of your credit report after 10 years, so you lose this account credit history and average age of your credit report decreases which may lower your FICO scores. More than one fallen off account does more damage. Old installment loans, like auto or student loan can cause a similar impact. See How to build credit history fast.
Sun Jan 30, 2011 12:01PM | Copyright: www.bad-credit-advisor.com | More in Credit Repair Tips | Comments (0)
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