Some of the most common reasons for a sudden drop in your credit score include late payments, too many credit card applications, and an increase from using too much of it and recently applying for loans or mortgages.
Credit scores can change for a variety of reasons but know that it's not unusual to see fluctuations in your score.
There are many reasons why your credit score may have dropped. Some of them might be obvious, while others can prove more difficult to track down - but either way, you should know what they are so that the problem doesn't continue resurfacing again and again!
Credit scores are calculated by taking into account your payment history, so missing or late payments could hurt you.
Top 5 reasons credit score drop
-
You have missing or late payments
Late payments can have a major impact on your credit score, with 35% of the total weight coming from payment history. Creditors typically report a past-due balance once you are 30 days late in making these types of debts and will likely decrease its value after 60 or 90-day periods pass where no action has been taken to settle up paying off what's owed (including fees).
Solution:
If you miss a payment, your best bet is to pay in full as soon as possible and talk with creditors about any possibilities for forgiveness. The sooner the money goes out of our account better!
-
You applied for a mortgage, loan, or new credit card
While it's true that applying for new credit can affect your score, this is generally only the case when you apply with more than one card at once. The reason why? A hard inquiry on someone’s report will have exactly what they need - an accurate picture of how reliable or poor their financial history might be in terms of paying back loans over time based on these inquiries alone (and without any other information).
Solution:
If you make sure not to apply for any more new credit, the effect on your score should only last a year. Focus on cards that are likely going to be approved so avoid unnecessary inquiries in future years!
-
Your credit utilization has increased
Credit utilization is the balance-to-limit ratio on your credit cards and other areas where you've had loans extended to yourself. This number accounts for 30% of FICO ratings, so it's important not only in how much debt there is but also in what those debts look like! As a general best practice try keeping these balances below 25%.
Solution:
If you have too much of your credit cards used up, it's time for some serious belt-tightening. The first step is paying off those debts and requesting an increase in limit on one card if needed; then open another new account with the right information so that snags won't happen again!
-
You applied for a lot of credit
It's important to keep in mind that adding one new line of credit every so often will only shave a few points off your score. However, if your applications for all these accounts are submitted at once it can result in an unexpectedly high drop-off which could put you at risk for higher rates or worse - missed opportunities among other things!
The best way to keep your credit score high is not by taking on too many loans at once. Applying for multiple cards can signal that you are a risky financial company, which may lead to them charging higher interest rates and giving fewer limits than someone with a good track record would qualify for in the first place!
Solution:
If you are looking to open up a new line of credit, try waiting at least 90 days before applying. This will help avoid any negative effects on your score that could affect future opportunities and approvals for other types of loans or cards in addition!
-
You cosigned a loan or credit application
If you’re thinking about cosigning for a friend or relative, make sure they miss payments on their account before doing so. It's important to understand how this will affect your credit as well!
Solution
Keep an eye on your cosigned account by making sure statements are sent to you or monitoring them online. It’s a good idea to set aside money in case any missed payments happen!
Why did my credit score drop for no reason?
Should you find yourself unsure of the cause for your declining marks, there might be many. Running over the list we discussed in our blog should first help us understand what would have led to this decline; second, given that none loves receiving bad news, maybe telling them their score straight away will help everyone involved find things simpler.
Your credit score is crucial and will determine whether you can acquire insurance, a loan, or even rent. Just make sure you study the report from one of the three main bureaus that provide this information within 30 days after making any modifications so that they would be effective!
Hire a Credit Repair Company for Credit Score Back on Track
Should your credit score cause you concern? While you seem to be doing everything perfectly, your score seldom moves. You could want assistance from a credit restoration business like Credit Restoration Easy. These businesses may help you to straighten your clean up your credit report and restore your score. Please don't hesitate to ask for help; they have the knowledge and experience to assist you. Your credit is too valuable to ignore; let a credit restoration firm assist you with maintenance!
Call on (888) 803-7889 & back your credit score on track!