April 18th, 2011
Credit Karma Q&A: The Ups and Downs of Credit Scores
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“Why did my credit score go down?” and “How do I improve my credit health?” These are the two most asked questions in the Credit Karma Credit Advice center.
The answers to these credit score conundrums are usually specific to each individual and depend on each particular credit situation, but there are some common factors.
Here are some responses to these two notorious questions, straight from the savvy minds of our very own Credit Karma users.
Why did my credit score go down?
- First thing to do would be to pull all three credit reports on yourself, to find out exactly why your scores are so low. Then, once you figure that out you can start reading the articles here to learn ways to reduce or eliminate the negative marks. (“Need a lot of credit advice“)
- Here is a little advice for all of the people out there. When you co-sign a loan for someone else–be it your spouse or children–please remember that it affects your score as well. Because of 3 car loans and a mortgage that I co-signed for my credit score went from an 810 to a 549. They defaulted and I couldn’t afford to take on the payments. Please think before you co-sign for anyone. (“I have really poor credit, how can I begin to fix it?“)
- You have to use credit to build credit. People with the best credit have a lot of history. (“Why is my credit score poor when I have never taken any loans out?“)
- Any paid off loans within the last 6 months. Sometimes, the positive benefit of old loans decline over time. This is especially true if you have just a few accounts. For example, an old paid off auto loan’s benefit will go away over time, causing your credit score to drop even if you do nothing. (“Credit score dropped despite positive difference from last month“)
- Don’t sweat the small credit score drops. Your auto loan caused a hard inquiry which will lower your score for a few months. (“How can you improve your credit health without going into debt?“)
- You need a diverse mix of credit to prove to lenders that you can deal with different types of credit. (Credit Karma blog)
How do I improve my credit health?
- Call your creditors and set up affordable payment plans. (“How do I build my score when it’s so low that I can’t get approved for anything?“)
- Do not close all your credit cards if they have reasonable fees. Keep your credit card balances below 30% of their limits at all times. (“How can I improve my credit health?“)
- No new inquiries, no big purchases, pay down your balances, and make every payment early or on time. (“I need to improve my credit health fast!“)
- Keep doing what you are doing. You are on the right track. Now all you need is time. The longer the credit history and the longer those accounts are open, then the better off you will be in the long run. (“Question about improving credit health and utilizing a credit card“)
- Don’t just concern yourself with paying your credit card bill on time; your rent payment could help build your credit, too. Experian has started including positive rental payment data in consumer credit reports, and other bureaus may soon follow suit. (Credit Karma blog)
If you’re baffled by credit scores, and other credit-related topics, head over to the Credit Advice center to check out other community discussions and submit a question today!