Deciphering changes in your credit score

Your credit score is probably one of the biggest financial mysteries ever invented. The FICO score is created through some fancy math based upon a zillion pieces of information in your credit file. Do consumers really understand them? Well it's kind of hard to understand something that is so secretive. There are guides to improving your credit score, but still, no one can tell you exactly how much one thing or another will increase or decrease your credit score.

So today I'm providing one little tidbit of information from my own credit file. Through some class action settlement, I was given three free months of access to Equifax's "Score Watch" service. This is not something I would pay for. I believe that the services offered by the credit agencies are generally a waste of money. But I got this for free, so I'm using it.

Here's what I found when I logged on today. Last week there was an inquiry on my credit file from a credit card company through which I had applied for credit. The same day, my credit score went down 11 points. So there you have it. That was my decrease for an inquiry, which typically causes your score to go down because it signals that you may be "shopping" for credit, which is considered negative.

I have no idea if that's a typical decrease related to an inquiry.... due to the whole secret formula thing that the credit score people have going on. So of course, your decrease related to an inquiry may be more or less and no one can tell you how or why that is or give you a better idea of exactly what your decrease may be. But that was mine.

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.