Credit Score Update

For the longest time, my credit score had been at 780. Over the last year, I knew that the score has fallen although I hadn't checked the score lately.

Why?

I knew that I no longer have an excellent credit score due the following reasons: the recent refinancing of my home loan and opening up three additional credit cards in the last year.

In addition, the refinancing process and the three new credit cards also resulted in five (5) hard credit inquiries, which are going to stay on my credit report for two years.  This also reduces the credit score. However, I have read that there are ways to get rid of the hard credit inquiries within a few months. I will have to look into that.

I figured it is finally time to see what my current credit score is via Credit Karma, a pretty good free website, where it provides the user a free approximate credit score from Transunion as well as a way to monitor whether the score is increasing or decreasing over time. It is free to make an account but of course, the way they make money is to have tons of advertisement and to present you with "opportunities" to save money with their sponsors. It is easy to set up and is user-friendly so, I don't mind using this in the future as well to monitor my credit score's progress. All you really need to give is the social security number, address, and birth date.

What Did I find Out When I Finally Checked My Credit Score Today?

When I checked Credit Karma finally, I found that my credit score had dropped from 780 to 760 in 2012, and then to the current 738 in 2013. This means that my credit score dropped from being "Excellent" rating to "Good" credit rating.

Credit Karma does not guarantee to provide an accurate credit score from all three credit bureaus but they do get their information from Transunion, one of the three credit reporting agencies. It is a good guess as to where the credit score really stands.

I usually try to check my score once a year but lately, I had been so discouraged and I knew that it would be lower than usual so I put it off for a while this time. Now that I know, I'm hoping that I can bring it back up to Excellent rating and that would probably happen as I pay off the debt.

Credit Utilization Issue:

The main reason for the credit score staying low eventhough I had paid off some debt recently is that one of my credit cards that I heavily use for gas/food/utilities, Chase Freedom Visa Card, has a $500 credit limit only. Since I use it for everything as a way of limiting myself from happily swiping other credit cards with higher credit limits, this low limit credit card is almost always at maximum credit limit and this definitely affects the credit score by bringing up the percentage of utilization and amount of balances that are near credit limit.

Solution:

I think that I will spread the usage around the other credit cards in order to keep all credit cards (except for the big Discover card with $1,1,980 balance) at the lower end of the credit utilization. Although, just using the lower credit limit Chase Freedom card each month does help me limit the balance each month, I really should learn to monitor my behavior other ways.