Credit Score Ups And Downs

I recently opened two credit card accounts with zero interest rates to do balance transfers. With the transfers, I paid off a loan I’d had for only six months. One of the new credit cards isn’t even on my credit report yet, but my score dropped seven points. How is it that my score didn’t budge for at least a year, then I pay off a bill and it drops seven points? Please help!–F. Brown, Washington, DC

It wasn’t paying the bill that lowered your score; it was applying for new credit, which can be a downside with balance transfers. But, there is an upside: Paying the 6-month-old loan in full should boost your score a bit.

Because you applied for new credit, thereby increasing the number of queries on your report as well as the amount of credit that you can access, and because lenders consider increased credit to be a risk factor, your credit score dipped. In addition, since you’ve opened three new accounts within the last six months, the recent activity could also be a factor.

So be careful about hopping from one credit card to the next simply for the short-term interest rate. Remember, the three major reporting agencies–Equifax, Experian, and TransUnion–may report different information, so your score could be higher or lower on each of them. In time, your score will go up again, but check your report about every six months at www.myfico.com to be sure.

Mail your consumer empowerment questions to Ask Your Advocate, BLACK ENTERPRISE 130 Fifth Ave., New York, NY 10011 or send an e-mail to sykest@blackenterprise.com.

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