Score Advice

5 Reasons Your Credit Scores May Have Dropped (And What That Can Mean)

After years of making timely payments, being disciplined when seeking new credit, and paying down your balances, why all of a sudden might you see your credit score drop by 20, 50 or 100 points? There are many reasons why there can be a slight or even major decline in your credit scores. Since credit scores are with you for your lifetime, remember that they respond continually to your credit and finance-related activities and behaviors.

When you see a score drop, that means something within the scoring calculation has registered recently updated information to deliver the new score. Here are a few components that contribute to many credit scoring models:

  • Number of Late Payments
  • Number of Inquiries
  • Average Age of Accounts
  • Number of Open Installment Loans
  • Average Credit Card Limit

Knowing that many credit scoring models consider these criteria, ask yourself a few questions about your recent credit activity:

1. What is your current credit card balance?

A traditional rule of thumb dictates that your credit card balance shouldn't exceed one third of its limit. It's recommended that you keep your credit card utilization below 30 percent on each card. These actions collectively show lenders that you know how to spend responsibly, and may help your credit scores. If you've reached or are nearing your max spending limit, the excessive debt from your credit card usage may be lowering your scores.

2. Have you recently applied for a mortgage, loan, or new credit card?

While an extra 20% off your department store purchase may sound enticing, too many new credit line inquires can lower your credit scores. This is also true of mortgages and car loans — one or two will likely not impact your scores significantly, but having several loan inquiries can cause your scores to dip. Lenders may also interpret this activity as an attempt to overspend.

3. Is inaccurate information appearing on your credit report?

Make it a habit to check your credit report regularly. It is possible for mistakes to occur that can lower your credit scores. If something inaccurate is showing up on your report, this could be an indicator that a lender has reported something incorrectly, or that you have been the victim of identity theft. If you need to dispute inaccurate information, do so immediately.

4. Have you missed any payments or had an account sent to collections?

Missed payments can have a large impact on your scores. If you are more than 30 days late on a payment, your credit scores will likely take a hit. When late items go on to be 60, 90 or more than 90 days late, you may see an even bigger hit. Not to mention late fees and increased interest rates! Save yourself money by making payments on time — and by paying down as much as possible, preferably the entire balance due. Making timely payments is one of the easiest things you can do to show you're using credit responsibly.

5. Did you close a credit card you've had for a while?

Did you know that the age of your accounts factors into many credit scoring models? This factor comes as a surprise to many, however, if you have had a credit card for a while (sometimes known as an ‘aged account') and closed the account, this could have caused a drop in your credit scores. If you have demonstrated a solid payment history and responsible use of credit over time, lenders are likely to see you as a lower risk. Pay off the credit card and leave the account open to keep the positive points for history, longevity and total available credit.

When any of these scenarios ring true for you, you may be closer to discovering why there's been a recent decline to your credit scores. Continue to monitor your habits and know that the little things add up and can adversely affect your credit scores.

Note: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinion or position of Experian.

Editorial Disclaimer: Opinions expressed here are author's alone, not those of any bank, credit card issuer, or other company, and have not been reviewed, approved or otherwise endorsed by any of these entities. All information, including rates and fees, are accurate as of the date of publication.

How Good Is Your Credit Score?

300 credit score301 credit score302 credit score303 credit score304 credit score305 credit score306 credit score307 credit score308 credit score309 credit score310 credit score311 credit score312 credit score313 credit score314 credit score315 credit score316 credit score317 credit score318 credit score319 credit score320 credit score321 credit score322 credit score323 credit score324 credit score325 credit score326 credit score327 credit score328 credit score329 credit score330 credit score331 credit score332 credit score333 credit score334 credit score335 credit score336 credit score337 credit score338 credit score339 credit score340 credit score341 credit score342 credit score343 credit score344 credit score345 credit score346 credit score347 credit score348 credit score349 credit score350 credit score351 credit score352 credit score353 credit score354 credit score355 credit score356 credit score357 credit score358 credit score359 credit score360 credit score361 credit score362 credit score363 credit score364 credit score365 credit score366 credit score367 credit score368 credit score369 credit score370 credit score371 credit score372 credit score373 credit score374 credit score375 credit score376 credit score377 credit score378 credit score379 credit score380 credit score381 credit score382 credit score383 credit score384 credit score385 credit score386 credit score387 credit score388 credit score389 credit score390 credit score391 credit score392 credit score393 credit score394 credit score395 credit score396 credit score397 credit score398 credit score399 credit score400 credit score401 credit score402 credit score403 credit score404 credit score405 credit score406 credit score407 credit score408 credit score409 credit score410 credit score411 credit score412 credit score413 credit score414 credit score415 credit score416 credit score417 credit score418 credit score419 credit score420 credit score421 credit score422 credit score423 credit score424 credit score425 credit score426 credit score427 credit score428 credit score429 credit score430 credit score431 credit score432 credit score433 credit score434 credit score435 credit score436 credit score437 credit score438 credit score439 credit score440 credit score441 credit score442 credit score443 credit score444 credit score445 credit score446 credit score447 credit score448 credit score449 credit score450 credit score451 credit score452 credit score453 credit score454 credit score455 credit score456 credit score457 credit score458 credit score459 credit score460 credit score461 credit score462 credit score463 credit score464 credit score465 credit score466 credit score467 credit score468 credit score469 credit score470 credit score471 credit score472 credit score473 credit score474 credit score475 credit score476 credit score477 credit score478 credit score479 credit score480 credit score481 credit score482 credit score483 credit score484 credit score485 credit score486 credit score487 credit score488 credit score489 credit score490 credit score491 credit score492 credit score493 credit score494 credit score495 credit score496 credit score497 credit score498 credit score499 credit score500 credit score501 credit score502 credit score503 credit score504 credit score505 credit score506 credit score507 credit score508 credit score509 credit score510 credit score511 credit score512 credit score513 credit score514 credit score515 credit score516 credit score517 credit score518 credit score519 credit score520 credit score521 credit score522 credit score523 credit score524 credit score525 credit score526 credit score527 credit score528 credit score529 credit score530 credit score531 credit score532 credit score533 credit score534 credit score535 credit score536 credit score537 credit score538 credit score539 credit score540 credit score541 credit score542 credit score543 credit score544 credit score545 credit score546 credit score547 credit score548 credit score549 credit score550 credit score551 credit score552 credit score553 credit score554 credit score555 credit score556 credit score557 credit score558 credit score559 credit score560 credit score561 credit score562 credit score563 credit score564 credit score565 credit score566 credit score567 credit score568 credit score569 credit score570 credit score571 credit score572 credit score573 credit score574 credit score575 credit score576 credit score577 credit score578 credit score579 credit score
Sign up for helpful tips, special offers and more!
You're signed up!
Our system is undergoing maintenance and will be available again soon.