Is it true that credit score can fluctuate? Or once it goes down, it is hard to get back up to where it used to be?
It is true that your credit score can fluctuate for different reasons. How hard it is to raise a score will depend on the reason for the fall. Below are some reasons why your score may fluctuate.
1. Changes in credit card balances - Charging more or paying credit card balances affects the credit utilization. One major component of your score is how much of your credit do you use. Ex: You have a credit card with a balance of $5k and a credit limit of $10k. Your debt utilization is 50% (5/10). In general, debt ratios greater than 30% is going to affect your score negatively. Lower is better.
2. Age of your credit history - The longer the better, so don't close out accounts that you no longer use. Keeping them open can positively affect your score.
3. Applying for new debt - This will temporarily lower your score. You now have added to your overall debt.
4. Late payments, bankruptcy, foreclosure - These are major negatives for your credit score. The will remain on your credit file for years. Late payments alone make up a big component of your score. Better to pay the minimum then to be late!
5. Quick way to raise score in few months- Ask for a credit limit increase on your existing credit cards, but only if you won't be tempted to charge more. This will cause your debt utilization ratio number to fall and the score to rise.
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