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Why Does Your Credit Score Fluctuate?


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By Becky Frost

You are already ahead of many Americans if you check your credit score on a regular basis. But what happens when you see that your score has fluctuated? A number of factors affect your credit score. Once you have examined these more closely, you may find some areas for improvement when it comes to your financial habits. Here are five factors to consider.

Did You Max Out Any Credit Cards?

Things happen, like emergency purchases, holiday spending, and unforeseen medical bills. If you are in a position that prevents you from paying off the balance on your cards each month, consider paying as much as you can and stay current with your payments. This will help keep your payment history solid and your balance from hitting too close to the limit. It is generally recommended to keep credit card balances at or below 1/3 of their limits.

Have You Recently Applied for Any New Credit Cards?

Were you tempted to apply for a new auto loan, mortgage or new credit card? When you are in the market for a new house or car loan, your credit may show additional inquiries. One or two inquires may not have a considerable impact. On the other hand, too many credit inquiries may negatively impact your credit score since a hard inquiry can stay on your credit report for up to two years.

Is There Suspicious Information on Your Credit Report?

If so, verify the information on your credit report across all three credit reporting agencies. There's a possibility that something you don't recognize on your report could mean you're a victim of identity theft.

Do not hesitate to report to the credit bureaus any information on your credit report that you feel is questionable. Suspicious information could be a red flag that your identity has been stolen. If your credit card is maxed out or new credit cards are opened in your name, it could lower your credit score.

Have You Made Any Late Payments?

If so, it may be time to adapt a new mental approach that encourages you to pay your bills on time. Consider the idea that paying your bills promptly not only a responsibility, but an accomplishment. Even paying the minimum due can help when it comes to your credit card, mortgage, and loan payments. Consider automatic bill pay options or online payments, since many creditors and banks let you set up payment reminders via your account.

Have You Contacted Your Creditors?

If you are not up to speed on your credit payments, you may feel a creditor is the last person you want to talk to. On the other hand, there is always the possibility that reaching out to your credit card issuer can help you resolve any issues. It doesn't hurt to ask if they sponsor any temporary hardship programs that can reduce your monthly payments and help get you back on your feet. Contacting them before you fall behind can help you get back on track before you start racking up late payments that could impact your credit.

Before contacting your credit card issuers, check with your financial advisor to make sure there aren't other solutions that could be better for your financial situation. After all, negotiating your credit card debt could have negative implications to your credit score.

Becky FrostAbout Becky Frost: Becky Frost is senior manager of consumer education for Experian Consumer Services, which offers credit monitoring products like freecreditscore.comTM. Find Becky on Google+.

This article is provided for general guidance and information. It is not intended as, nor should it be construed to be, legal, financial or other professional advice. Please consult with your attorney or financial advisor to discuss any legal or financial issues involved with credit decisions.


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