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Debt Help

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Thursday, April 27, 2006

FICO Score Retreats to 697: Am I Worried--NO!

I recently checked my FICO credit score to find that my score has dipped from 709 to 697. No surprise, really, as I was expecting a slight decline in my score this month, because I've been moving some debt around in order to avoid interest charges wherever I can.

Am I worried about the dip in my score? Nah.

Some folks out there are warning that a dip in your credit score can result in the interest rate on your credit cards going up. While this is true if, for example, you hit a major financial bump in the road and can't make the minimum payment due on any of your credit cards, this is certainly not the case if you have been paying all of your bills on time. The bottom line is, the credit card companies don't want to do anything to scare off or otherwise punish responsible consumers, and raising your interest rate because of a slight dip in your credit score would be unprofessional and unreasonable--even draconian, in my opinion.

Now, if I decided to max out all my credit cards all at once, I'm certain that my credit score would dip to a level that might cause the interest rate on my cards to up. But this should be expected, because my maxed out status would logically make me an increased credit risk in the eyes of my creditors, which makes sense.

I won't need to move my debt around for a while, so by next month I'm betting that my credit score will be back up in 700 territory. I'll be paying at least 3 times my minimum amount due--as usual--on all my credit cards this month, and I've also just paid down one of my accounts to $0, so I may end up with score in the 715-720 range as a result. Wish me luck!

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