I've always prided myself on knowing what goes into a good credit score- see my previous blog on Credit Score Tips (http://activerain.com/blogsview/765125/credit-score-tips-). Well, sometimes we need to "do as we say" and not as we do!

I should have remembered that length of credit is 15% of your score! I knew it impacted your score, but I seriously forgot how much! I kept thinking it was like maybe 5%, 10%, etc. Well now that I come to think of it even 5% could easily drop you 40 points!

Well, I went from a 793 to a 738 in the course of a year. Several factors impacted this:

• My credit was run six times- this is too many! But I had to have it run twice as a Principal Officer at my mortgage company when we applied for our FHA license, once when I refinanced, once when I thought about refinancing my home equity, and seriously regarding a couple pulls, even I couldn't figure out why the banks ran my credit (I learned about these when I went to the free/non score hurting service at- www.annualcreditreport.com).
• I canceled all my credit cards but one. The magic number I've always been told to keep (per my credit bureau contacts) is two. I made an informed decision to cancel because like many other Americans this year, I was informed my rate was increasing astronomically. I was not willing to take my card with a 3.16% rate (tied to the LIBOR index) to a variable at 17+%, not when I was paying off a balance. To me, the risk of my score dropping from an increase in debt to credit ratio was worth it. I kept my long-term goal of having no credit card debt at the forefront- when this debt is totally gone in about another year, I'll have an excellent score again without having paid extra interest.

The downside though was that the credit card I did keep just sent a notice that they, too, are increasing my rate. They were blunt when I called that when they issued cards tied to the Prime index, they didn't expect it to hover around 3.25% for months. So, they sent a notice that the new rate would be Prime + a Margin of 3-11 percent. In the mortgage world- margin + index= rate. So, I knew that my rate would be 3.25% plus a minimum of 3% more, so it'd be at least 6.25%. This seems reasonable considering the hit banks, credit unions, and mortgage companies have taken. But my rate went up to 7.25%. I know this is still good, but I was curious, "why didn't I get the best rate?". Well because my score went to 738. So I asked the customer service person, "what's the magic number, 740?". And she replied, "No, it's actually 760 now." Whoa! I figured this was coming, but it sure came quick! A year ago anything over 700 would be considered excellent. Now 738 is just very good.

In the end, I'm really not too upset. Like I said, a 7.25% rate is still good in the world of credit cards. This card will be paid off in about five months, and then I'll be snowballing my payments and aggressively paying off that last elephant in the room. But borrowers beware, think twice before canceling a bunch of cards!