It’s a common question–Why did my credit score drop? Your score can fall for many reasons. Some drops are insignificant, while others can seriously hurt your finances. We examine nine common reasons your credit score may have fallen.
So you recently pulled your credit report or got an alert from a monitoring service.
Suddenly, your score is lower than it was last month. What gives?Credit scores are, to say the least, complicated. They’re based on a whole host of factors. Plus, each factor is weighted a little differently. So this means your score can drop for a number of reasons.
Pinpointing the exact reason for your credit score’s decline can be tough. But here are nine common reasons your score could have declined. Once you figure out which is causing your issue, you can take steps to fix it.
9 Reasons Your Credit Score Has Fallen
1. You’re 30 days late on a payment.
Technically, your creditors can report a payment as late as soon as it’s past the due date. In reality, though, this rarely happens. Most creditors won’t report a payment as late until it’s 30 days overdue. But once that happens, your credit is likely to take a big hit.
Solution: If you think you’re up-to-date on all your accounts, check your actual credit report. It will tell you which account has recorded a late payment. You can either bring the account up to date or call the creditor to dispute the late payment record. Another option is to ask for a goodwill adjustment. This can erase the late payment from your records, giving you a boost.
2. An already late payment became even later.
Creditors can report a payment as late at any time, but credit scores account for various levels of late. A 30-days-late payment will drop your score. But once you cross into the 60-days-late category, it’ll drop again. Go 90 days overdue, and you’ll see yet another decrease.
Solution: Again, you’ll find the record of which account is overdue on your credit report. Bring the account up to date as quickly as you can, even if that means working with your creditor on a payment plan.
Many times, lenders are willing to work with you, especially if you’ve recently undergone job loss or other hard times. Again, if you’re not in the habit of letting payments go late, you may be able to get a goodwill adjustment. But you’ll likely have to bring the account current first.
3. You charged up your credit card.
Your credit utilization ratio–how much credit you’ve used versus how much you have available–is an essential piece of your credit score. This is why the best practice is to pay off your credit cards in full each month. This keeps your credit utilization at or near 0%, which is great for your credit score.
What if you recently made a big purchase or just over-relied on your credit card? If you don’t pay down the balance, that will show up on your next credit report. This will cause your score to decrease.
Solution: Pay down your balance as quickly as you can using a balance transfer credit card. And then try to make a habit of never charging more than you can comfortably pay off in a month.
4. An account went to collections,…
The post 9 Reasons Your Credit Score Has Dropped appeared first on FeedBox.