Why has my Credit Score Gone Down (2024)

FAQs

Why has my Credit Score Gone Down? ›

Credit scores can drop due to a variety of reasons, including late or missed payments, changes to your credit utilization rate, a change in your credit mix, closing older accounts (which may shorten your length of credit history overall), or applying for new credit accounts.

Heavy credit card use, a missed payment or a flurry of credit applications could account for a credit score drop. Amanda Barroso is a personal finance writer who joined NerdWallet in 2021, covering credit scoring.

Things like new credit applications and missed payments may impact your credit score. You may be able to improve your credit score in a number of ways, including making sure you're on the electoral register, managing accounts well and limiting new credit applications.

A low credit score may limit your borrowing options, or make it harder to access credit at all. Many factors contribute to a low credit score, including little or no credit history, missed payments, past financial difficulties, and even moving home regularly.

For your credit score to drop 100 points at once, you're most likely talking about being 90 days late or more on a loan or credit card payment you're on the hook for. Believe it or not, a single late payment could cause damage in that ballpark, especially if your credit score is higher to begin with.

It's possible that you could see your credit scores drop after fulfilling your payment obligations on a loan or credit card debt. Paying off debt might lower your credit scores if removing the debt affects certain factors like your credit mix, the length of your credit history or your credit utilization ratio.

Various weighted factors mean that even with no credit, your credit score could still be low because the length of your credit history or credit mix, for example, could also be low.

If you've had credit in the past but no longer use credit cards, or you have closed accounts on your report, there won't be recent activity to produce a score for you. And even if you have recent credit activity, you still may not have scores if your lenders don't report to the bureaus.

Put simply, your credit score can go down if a lender reports any 'negative' information to the credit reference agencies (CRA). If the new information the lender reports to the CRA makes you seem like a less reliable borrower, it can cause your score to drop.

There are two ways that you can get a derogatory mark on your credit reports. One way is if a lender or creditor reports negative information about you to the credit bureaus, and then it shows up as a negative mark. The other way is if the credit bureaus add public records to your credit reports.

Why did my FICO Score drop for no reason? ›

Reasons why your credit score could have dropped include a missing or late payment, a recent application for new credit, running up a large credit card balance or closing a credit card.

Credit scores can drop due to a variety of reasons, including late or missed payments, changes to your credit utilization rate, a change in your credit mix, closing older accounts (which may shorten your length of credit history overall), or applying for new credit accounts.

Various weighted factors mean that even with no credit, your credit score could still be low because the length of your credit history or credit mix, for example, could also be low.

Some common reasons that your credit card might get declined include having the card's credit limit maxed out, accidentally triggering the card's fraud protections and even entering incorrect payment information on a website.

If your financial situation changes or your credit score takes a hit before closing day, the lender could deny your mortgage. Making major purchases, applying for new credit or changing jobs are common mistakes that could put your mortgage approval at risk.