[lboard]

I recently refinanced my homw to get a lower interest rate. I noticed that within 2 weeks of the application my credit score had dropped 50 points. Please explain this to me.

[ScottGem]

Did you increase your debt at the same time?

[lboard]

Yes, probably an increase of about $4000. How long will it take the score to go back up. I also paid off some credit cards at the same time time which should even my financial
Obligations out. I combined a HELOC and my first mortgage. The first mortgage had a 6.125 interest rate but the HELOC had about a nine percent interest rate. I combined them to get a 5.375% interest rate.

[ScottGem]

Its really hard to tell, they jealousy guard the exact formula that goes into calculating the score. Was the HELOC closed? If it wasn't, then you increased your debt by the balance of the HELOC. Even though it may have zero balance, the score is figured on the amount available

[lboard]

I am glad I am communication with you. I paid the HELOC off, but do I have to actually close it? Will I have to call them to close it or renegotiate or will they contact me?

[ScottGem]

You actually have to close it, not just pay it off. A HELOC is a revolving line of credit. So at any time its balance can be from $0 to the credit line limit. Unless the account was closed, then the amount if the line is still listed on your credit report and could affect your score.