At the end of June, I checked my Credit score and noticed that my credit score went down. Well, a lot has changed since suffering my recent setbacks. I checked my score today with credit karma and realize that my credit score is back up again. Why?
Credit Card Utilization
The main reason why my credit score went back up is because of my credit card utilization rate. In June, I was using 100% of the credit available on one of my credit cards. This was not helpful to credit health and my score suffered as a result. My TransUnion score declined by 34 points and Equifax went down 27 points.
Well, I’ve now paid down my credit cards to $0 as reflected in my post about how I invested $15,000. So, with my credit utilization ratio back in my favor, my credit score went back up.
My TransUnion score is 805 and my Equifax score is 809.
Purpose For High Credit Score
Maintaining a high credit score is important for a number of reasons, but I will highlight two of them that applies to my situation.
The first is the potential need to buy a car. Now, I won’t need a car for another year. Moreover, because I hate debt, I plan on purchasing my next car with cash. However, we all know that life happens when you make plans. So, just in case I’m in a situation where I would need to take out a small car loan to purchase my car of choice, having a good credit score will allow me to get the best interest rate.
The second is that I want to buy another house to continue my investment in real estate. I am definitely not in a situation to pay cash for a house. So, I will be taking out another mortgage. I want to ensure I get the very best interest rate I can get. The current interest rate on my home is 3.5%. Not bad, but it could probably have been lower. Also, I won’t have to worry about the banks wondering about whether to give me the loan in the first place. They will be able to see that I am a very credit worthy customer.
There you have it. I didn’t want to make this a long post. But, thanks to the fact that my financial house is in order, my credit score went back up. I just have to maintain it and possibly get it to the point where it can be higher.
What do you think? Let me know in the comments below.
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