Question : Can a fixed home equity loan drop my credit score?
I requested $10,000 dollar home equity loan to roof my house. My FICO score was 780 until approx March when I applied for a home equity loan at a fixed rate. Now my FICO score is 740. What happened? I am never late on any payments. I pay over the minimum amount do on my card every time.
- asked by happydawg
All Answers:
Answer #1
There are a number of factors that go in to thescoring model and on time payments is a major one,but not the only one.Having a new account can be arisk factor all by itself. Since it is a closedend loan, the balance is near the limit and it hasprobably only just started reporting.I wouldn'tfreak out or anything. A 740 is still pretty darngood. My scores boucne around with little rhyme orreason.Sometimes opening a new account can have apositive affect. I went to Home Depot to buy $300worth of windows and walked out with 20K in newcredit. Having the additional available credit hada very favorable affect on my scores. I don't haveto use the credit if I don't need to.Also, if youhave a balance on a credit card that is more than50% of the limit, you may want to pay it down ortransfer some of the balance to another account sothat none of your balances are over 50% of thelimits.Again, a 740 is a great score so you reallydon't need to be worried about anything and itwill probably go back up in a month or two oncethe new loan is a little more seasoned.
- answered by Dale H
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