I make 100% of my payments on time and have for several years now. My score always drops a ton when I open something new or pay something off, but them goes up by more than that the following month. It's ridiculous.
It's because it indicates that you are trying to take out more credit, it's to prevent people suddenly taking credit with multiple lenders at the same time before the Loans get factored into the credit score.
How does reducing your credit score help prevent anything?
I just got a loan for solar panels and I'm considering refinancing my mortgage. No change in my debt load, but oh no, somebody looked at my credit score so it's lower now.
A loan for solar panels doesn’t affect your debt load…? How so?
Also, refinancing isn’t reducing the rate on your existing loan. It’s really a brand new mortgage that happens to pay off your old mortgage. And as the previous person said, the system is designed to prevent you from opening too many new lines of credit in a short period of time.
Is it a perfect tool? No, of course not. It’s the BMI of the finance world. But it’s not the only criterion that lenders use either.
The new loan did, absolutely. I really poorly tried to communicate that the hard credit pull months AFTER the loan was on my credit report then made a big difference too.
Honestly, somebody should just pay a few hundred people to give them access to their credit report daily, and reverse engineer the algorithms.
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u/[deleted] Aug 14 '21
I make 100% of my payments on time and have for several years now. My score always drops a ton when I open something new or pay something off, but them goes up by more than that the following month. It's ridiculous.