Question by happydawg:
Can a fixed home equity loan drop my credit score?
I requested ,000 dollar home equity loan to roof my house.
My FICO score was 780 until approx March when I applied for a home equity loan at a fixed rate. Now my FICO score is 740. What happened? I am never late on any payments. I pay over the minimum amount do on my card each time.


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Answer by Dale H
There are a number of factors that go in to the scoring model and on time payments is a major one, but not the only one.

Having a new account can be a risk factor all by itself. Since it is a shut end loan, the balance is near the limit and it has probably only just started reporting.

I would not freak out or anything. A 740 is still pretty darn good. My scores boucne around with tiny rhyme or reason.

Sometimes opening a new account can have a positive affect. I went to Home Depot to purchase 0 worth of windows and walked out with 20K in new credit. Having the additional available credit had a very favorable affect on my scores. I do not have to use the credit if I do not need to.

Also, if you have a balance on a credit card that is more than 50% of the limit, you might want to pay it down or transfer some of the balance to another account so that none of your balances are over 50% of the limits.

Again, a 740 is a great score so you really do not need to be worried about anything and it will probably go back up in a month or two once the new loan is a tiny more seasoned.

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