Credit scores are a key indicator of your creditworthiness and can be used to determine whether or not you'll be approved for certain jobs, loans, and other financial products. One question that many people ask is why their credit score drops. This article will explore the reasons behind a drop in your personal credit score, what might have caused it and how you can fix it.
Top Reasons for credit score drop
1. You missed a payment
It has been a week since your last payment and you are starting to get worried. You know that a missed payment on your credit card can cause the interest rate on the balance to increase, but what about all of the other things that might happen? The following is only a small list of some of the negative consequences of skipping just one month's worth of payments: Your credit score could drop, which means it will cost more in terms of money or time when applying for loans; you may have difficulty getting approved for an apartment rental because landlords check applicants' credit scores before approving their applications; if your car loan has a missed payment clause, chances are you need not worry as much as with almost any other type of loan.
2. Your credit card balance is higher than usual
Credit card balances are higher than usual, and you're not sure why. You go to your credit report account and notice a $2,000 increase in the amount of debt on your current balance. Why is this happening? There could be many reasons for this change. One possibility is that you have an outstanding balance from last month's bill which will show up as a payment past due next month. Another possible reason may be because of an interest rate hike or a new promotional offer like 0% APR on purchases for six months with no annual fee (this is just one example). It's always good to review your statement every time there are changes so that you can be proactive about any upcoming charges or payments.
3. There’s a mistake in your credit report
Credit reports are used to determine the creditworthiness of people seeking to borrow money. They can also be used as a scorecard for determining which consumers have the best financial habits. In order to get the most accurate and up-to-date information, it is important that you review your report regularly.
4. You’re a victim of identity theft
A new identity theft scam is making its rounds, and it’s just as bad as the old ones. The scammer steals your personal information from a business and uses it to create fake credit cards in your name. If you don’t know about this, you could find yourself with a poor credit score for no reason at all. That's why we're here to let you know how to spot these scams before they cause any damage.
So if you get a call or email asking for personal info, be wary. You might be dealing with an identity thief who wants nothing more than your credit card number and pin code so he can go on shopping sprees using your hard-earned money.
5. Someone else using your credit card account
One of the most common mistakes that can ruin your credit score is a case in which someone else has used your credit card account to make purchases. This is often because cards are lost or stolen, and unfortunately, there isn't much you can do about it if that's what happened. However, when this happens, it's important to know how you should be addressing it with the company that issued the card. You'll want to contact them as soon as possible so they can cancel any transactions made by people other than yourself- otherwise, you may end up paying for something that was never yours.
6. You cosigned a loan or credit card application
If you’ve ever cosigned a loan or credit card application, you know that there are many risks to this situation. What if your borrower stops making payments? What happens if they default on the loan and the responsibility falls on you? These are all very real possibilities, which is why it’s important to be aware of them.
We want everyone to enjoy their life responsibly with more money in their pocket. That's where Credit Score comes in. We're here to help make sure that no one gets into trouble when co-signing for someone else and can't afford it themselves.
7. You applied for a lot of credit
If you're anything like me, you applied for a lot of credit. You had to, in order to survive in this economy. Now that the economy is recovering and the unemployment rate is dropping, it's time for you to evaluate your options and figure out what kind of debt will benefit you most. For instance, if you have a low score with no plans on getting it up anytime soon, then perhaps car loans are best for you. If not then maybe student loans or mortgages would be better suited for your situation. Whatever type of loan or credit card we recommend, at least we can help. It's all about making sure that your hard work pays off.
8. You closed an old credit card
Have you closed an old credit card with a low limit? If so, your score might be affected. You see, it's the total amount of available credit that makes up 30% of your FICO score. Simply put, if you have less available credit than other people who apply for loans and lines of credit then they will have a higher chance to be approved for those items. Want to keep this from happening? Keep all open accounts active at all times.
9. You paid off a loan
There's no need to stress about a loan you've already paid off. If your lender has sent you the wrong information, it can be difficult to update their records and get them in sync with reality.
It doesn't matter who is at fault for this error; all that matters is that you're able to make sure they have the right information so they don't penalize you or turn down future applications. It takes just one phone call at (888) 803-7889 or emails to correct this issue and ensure your credit score stays strong.
