It’s not something that bothers me at all.
- Credit scores can fluctuate for many reasons.
- Mine recently took a noticeable hit, but I don’t mind.
Many of us don’t pay much attention to our credit scores until it’s time to borrow money, whether it’s in the form of a mortgage, car loan, or Personal loan. And generally, I don’t pay much attention to my credit score on a monthly basis.
But a while ago, I signed up for credit score alerts through one of the credit bureaus after my husband found out about someone trying to open an account in his name. My husband actually froze his credit, and while I didn’t do the same, I decided signing up for alerts was a smart move.
Now whenever there is a change in my credit score, however minor, I get an alert. And that means I get a lot of alerts.
You see, credit scores can fluctuate quite frequently, and in the past I’ve received alerts that my score has gone up two points or down three. Usually I don’t even save these minor changes because they’re pretty meaningless.
But recently, I noticed that my credit rating had dropped by 15 points. It’s more of a change than I’m used to, so I decided to dig in to see why. But in the end, this fall is really not a problem.
I don’t sweat a little credit drop
Although a 15 point drop is more significant than the usual changes in my credit rating, it is not a drastic change. And so for that reason alone, I’m not too worried.
But above all, I am not worried about this drop because:
1. I know why it happened
Your credit utilization rate, or the amount of available credit you use at one time, is one factor that determines your credit score. Recently I charged a huge home repair to a credit card while paying for a vacation. This resulted in a temporarily large balance, which temporarily triggered a higher utilization rate which undoubtedly led to the aforementioned 15 point drop. I’ve already paid this balance in full, so I expect my score to return once saved.
2. My credit rating is still strong
A 15 point drop in my credit score still left me with a score above 800. And frankly, once you’re in the 800 range, it doesn’t matter if your score is 805 versus 820 versus 835. You are likely to find it difficult to borrow money whenever you want with such a high score.
3. I don’t need short-term borrowing
Even though that 15 point drop would have brought my credit score back below 800, the reality is that I don’t plan on borrowing any money anytime soon. Mortgage rates are very high right now, so I have no intention of refinancing. I don’t anticipate needing a personal loan to finance a purchase as I have money in savings for it. And although we need a new car, right now there’s none to buy, so I’m not planning on taking out a car loan this year.
Should You Worry About Credit Score Changes?
Minor changes in your credit score shouldn’t keep you up at night. There are a few different reasons why your score might move within a 10-point range, or even a little beyond, from month to month, and for the most part, you don’t need to panic about small changes.
But if you see a drastic drop in your credit score — say, it drops by 60 points — that’s something you’ll want to investigate. You could see your score drop as much – or more – if you pay a bill late, and that’s a situation you’ll want to fix.
In the meantime, I don’t plan on actively checking my credit score anytime soon, although I’ll probably get an alert once this number is adjusted. Hopefully I’ll see a 15 point increase next time, but otherwise I won’t bother either.
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