My score suddenly dropped A LOT (50 points)

My score suddenly dropped A LOT (50 points)
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#1

Not long ago (a few months) my credit score was 800. I owned a condo (primary residence) and a lot for which I had a short-term I/O lot loan because I planned to build a house. I bought the lot in 11-2018. With the proceeds from my condo sale in April, I paid off my lot loan and my car loan (had $6k left). I’m renting for 6 months until the house is finished. I am already approved for a construction loan and I just sent the lender a copy of the lot deed and the executed build contract. When I applied in April 2019, my credit was 784. No biggie, I just figured it was because I sold the condo. But I just checked it today and it is now 749! To me that is BAD credit. WHYYY did it drop so low, so fast? I have $5k in credit card debt that I incurred in May for moving & housing expenses until my apartment was ready (represents 7% of total available) and only a student loan which I’ve been paying on for a substantial amount of time. WHY did it drop so low so fast, and what is going to happen with my house build? Will the lender look at that and say, your credit dropped 40 points in 2 months? Am I in trouble here and can I get it to go back up to where it SHOULD be?


#2

Hi @jckmm! Sounds like you have a lot going on! It’s likely that several things contributed to the drop in your score, which is often the case. The factors that affect credit scores aren’t hard to understand, but a big life change like your change of residence affects many of them all at once. That does make it hard to attribute X number of points to any one action.

I’m betting your score drop comes from a mix:

  • You closed several loans out, reducing your credit mix.
  • You applied for a new loan, causing hard inquiries on your credit.
  • You had moving and other expenses, pushing your credit utilization up a bit.

Here’s a look at how different actions can lead to a drop in credit scores. You’ll see a few things that match your recent credit activity.

The good news is, your 749 still puts you solidly in the excellent range. If your construction loan is already approved and you don’t have immediate needs for more lines of credit, you’re in good shape. And the fact that you’d been as high as 800 indicates you have great credit habits, so your score should rebound over time.