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Q. I am attempting to improve my credit rating to qualify for the best loan possible in 4 - 8 months. Part of my Credit score has is low because I do not have enough credit history, the other I have some bad marks that I am currently challenging. In a attempt to get some more credit history, I have a applied for a few credit cards and qualified for low credit limits and avg credit limits. Now after the accounts have made it to my credit report, my score has taken a 30 point drop in my score. My question is this, given the timeframe up above (4-8 months), what is my best recourse... 1. Cancel new card or cards 2. Cancel low credit limit cards. Will this look bad. 3 Just wait it out and keep low balances and develop credit history for 4-8 months I would appreciate any Constructive feedback from someone who has had experience with this. What caused the 30 point drop, does this go away after my first payments are registered?

A. Your credit score dropped because you applied for these credit cards. Each time you apply for new credit, it is reported (basically as a negative) on your credit report; however, over time having those credit accounts (if there are little or no balances on them/pay on time/etc) will actually help your credit. The main part of your credit score is determined by your total credit available and the current balances on those accounts. For example, assume you have five credit cards with $1,000 balance on each. Your total available credit is $5,000. If those cards are maxed, your balances divided by your total credit is a wash which means your credit will be terrible. On the other hand, if you have the same credit available ($5K) and your balance is only $100 on each card, this will mean that out of $5,000 available you only are using $500, which is good for your credit score (better if there are $0 balances). If you start cancelling cards, , then you are worse off because the ratio of your balances to your available credit is goes down. NO MATTER WHAT, don't close any accounts, or start charging on these accounts, that does not give you better credit, but actually does the opposite. I doubt you can make a whole lot of difference in 4-8 months, unless you can pay off all the credit cards that you have a balance on, but your best optio of the three is definitely to not charge anything on these cards, pay all your bills (even electricity, etc) on time, pay off as much of your credit card balance as possible, but do NOT apply for any more credit or charge anything on the cards or close the accounts. All three of these will impact your credit score. The best info I've found online is at www.myfico.com.

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