FICO Score keeps dropping and I have no clue why...

[Anonymous]

Okay, I got a little more clarification today from my mortgage loan officer, and it seems (in my case at least) that both DaBears and Jamie123 are right. According to her, my  high 700 credit rating gave me a safe enough cushion that any dings from a new loan (car) or inquiry dings didn't affect my ability to get a loan, and I'm still getting the very best rates available today. With that said, she said she tells most clients to absolutely refrain from opening new credit within 6 months of applying for a mortgage, as it certainly can hurt their chances overall. Basically...going in with a 750 or less score can indeed hurt you, but for someone with a high 700 score and solid income, you have much more leeway to obtain a new loan right before a new mortgage loan without it having much, if any affect on you at all, both in terms of rates and the amount of home you can afford. 

As for my score, she said it should bounce back up to where it was previously in 6-12 months as things settle down a bit, and recommended not opening or closing any current accounts for the next year if possible. Lastly, she said my new car/installment loan certainly affected my score, as again its a new loan (which affects my overall age of acounts) coupled with the initial ding of getting the loan. But in terms of overall debt, it didn't have any affect there at all.

[cashnocredit]

It could be worse. A LOT worse.

Mine dropped to 690 from 760 as a result of rebucketting.

http://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Major-drop-FICO-now-lower-than-2-years-ag...

[Anonymous]

forgive me but what is rebucketing, and how to you avoid it?

[guiness56]

You can't avoid rebucketing.  It is actually a good thing.  It means you are moving from one group to the next.  Kind of like going from the wading pool to the deep end.

When you are rebucketed, you are put in a similar scoring bucket and compared to everyone else in that group. It is a good thing because everyone isn't scored the same.  For instance some one new to credit isn't in the same bucket as someone with a long history of credit.

[cashnocredit]

---

@Anonymous wrote:

forgive me but what is rebucketing, and how to you avoid it?

---

Credit scores are made from creating groups of similar people's credit history. For instance a thin file or a short file, files with chargeoffs or collections, and files with public records. Then variables within each group like utilization, and number of accounts with balances, are put together to determine score.

When you go from being in one group to another you can see large changes in your FICO score because they aren't matched up perfectly.

There is really nothing you can do to avoid it and your scores are as likely to go up as to go down when your "bucket" or grouping changes.

[rebroker212]

I'm a NYC real estate broker and trust me you don't want any new purchases to show up especially after you have applied. Most lenders will run your credit while your at the closing table and they better. Or see as much as a paper clip purchased. It's a great time to get a mortgage as rates are so low but boy are they tough on approvals....good luck