You’ve probably heard that hard pulls on your credit report can ding your credit score and keep it low for a few months. Since I’m now applying for my third mortgage in eight months (one purchase, two free re-fis), I’ve actually gotten free peaks at our credit scores and watched how quickly they recover.

Hard Pulls Last About a Year
We first started having our credit pulled in February of 2009 as we started shopping for homes. We got a preapproval to see how much we could really afford. We didn’t end up getting a mortgage until July of 2009, so we had at least five or six hard pulls in the span of four months. The result was a 30-point dip in our credit scores. Fortunately, that wasn’t enough to keep us from getting a great re-fi rate, because our scores were around 800 when we started.

With our December re-fi, we had all of those hard pulls on our credit still. Now we’re in June, 2010 and our credit scores have fully recovered to the place they were when we first started mortgage shopping. The hard pulls from February, March, April, and May are off our credit reports already and the June/July 2009 pulls don’t count because we received a mortgage within 30 days of them.

Closed Cards or Reduced Limits Don’t Make a Big Dent
Chase recently notified me that they were cancelling my card. That didn’t appear on my report as yet, but I don’t expect it will make a dent in our scores. We have other closed accounts (store cards), and there has been no effect from all those closures. Bank of America cut our credit limit from insane to merely ridiculous, and that also had no effect on our scores.

Big Loans Don’t Outweigh Clean Credit Histories
Despite hefty student loans on my husband’s report, and a mortgage on both our reports, we still have very high scores. I attribute that to our on-time history. Although he had late payments in the past, most of those were more than seven years ago, so they’re no longer on his report. Even if they were, we closed most of his cards when we got married because mine had higher limits and longer histories. We also make on-time payments through automated debit for all our student loans, so that improves our credit histories.

Credit Utilization Is Key
When it comes to our rotating credit, I think our low utilization ratios are very important. Even with the cancelled account, the highest we got is 17% of our available credit. Most months we use about 4% of our available credit.

If you want to keep your credit score high, pay on time and don’t use all your credit. Those seem to be the two biggest factors keeping our scores in good condition.

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