Eddie On Everything

My sudden jump in FICO credit score

February 21, 2008 on 10:34 am | In finance |

What’s in a credit score? Good question.

A FICO credit score is a single number that, in theory, quantifies your creditworthiness. In practice, however, it doesn’t always work out like that. Comprised of factors such as length of credit history, number of open accounts, and ratio of debt-to-credit available, credit scoring techniques can confuse even the savviest borrowers.

Take, for instance, the recent happenings with my credit score. I received a notice today that my credit score had changed by more than +/- 20 points. I was expecting a jump - last month, I received notice my score fell by approximately 40 points because a company that I’ve never heard of reported that I was late in making payments. (For the record, I haven’t made a late payment on any account or liability in more than 10 years.) I filed disputes with each of the three credit bureaus and the negative history was removed almost as quickly as it was added.

However, I’m still left wondering about the result:

I would have expected my score to return to about 700, where it has hovered for the past year or so. Instead, it shot up to a whopping 745. Why? I haven’t done anything different in the past month - I still have about $12,000 of credit card debt (at 1.9% - so it’s not going to get paid off any time soon), I still have $100k in student loan debt, and I still make the same payments each month. I keep opening new cards at the same rate I normally do. (My latest - I got a free $150 for opening a Chase Freedom card.)

So why the big jump in score? Inquiring minds want to know.