Why did my credit score drop?

You want to buy a house, but you probably don’t have the money upfront for it. So he decides to apply for a mortgage. However, he realizes that his credit score is not where he should be when the time comes. Instead of being pre-approved, he is turned down because his credit score is too low.

Getting a car loan, mortgage, or even renting an apartment can depend on having a high score. If you’ve been turned down for a loan or credit card, you may be wondering, “Why has my credit score dropped?” The simple answer is that it depends. For a long explanation, read below.

Late payments

Credit history is the most important factor used to calculate your credit score. If you miss one or more payments in more than 30 days, your credit score will decrease. Making payments on time is the best way to improve credit. So naturally, the opposite action could destroy your credit score.

This also applies to people you’re a co-signer for and joint account holders: if you miss a payment, your score will suffer. That’s why it’s essential to carefully consider who you sign up with and become a co-owner of an account with. For example, if you don’t close joint accounts immediately after the divorceyou could be in for a surprise.

A seriously delinquent account may be sold to a collection agency in an extreme case. As a result, this collection account will show up on your credit report as a separate account, dramatically negatively affecting your credit score.

Irresponsible spending

Not surprisingly, spending like there’s no tomorrow can destroy your credit score. This includes going over the limit on one or more of your credit cards or simply having high balances on your credit cards. Ideally, you should use 30% or less of your available credit limit. If the percentage is higher than that, your score will drop rapidly. If you’re going to use your credit card, it goes without saying that you shouldn’t borrow money that you can’t payback.

Circumstances that are out of your control

If you’ve been making payments on time and don’t have a high balance, you may be wondering, “Why did my credit score drop?” In the following cases, it can happen through no fault of yours.

Identity Theft

Check your credit reports to see if you recognize all the accounts listed. If there are a few surprises, you may be a victim of identity theft. However, there is a little hope: you can freeze your credit for free to prevent other accounts from being added. You can also contact the companies that opened the funds to report the fraud, and the charges may be withdrawn.

Report bugs

You can also check your credit report for new negative items that shouldn’t be there. For example, if it is reported that you have missed a payment, but you have, that is a new error on your credit report that needs to be corrected. In this case, you can start the credit repair process to fix this error and your score.