What Caused My Credit Score to Drop and What Can I Do About It?

 


Have you ever seen that episode of Black Mirror where your social media following dictated whether or not you could buy a car or be allowed into a prominent apartment complex? This is how credit scores function in general

A credit score can assist you in obtaining a loan, purchasing a car, or renting a condominium. If you have bad credit, it might close a lot of doors and limit your financial options.

It's not easy to stay in good financial shape. Even the tiniest change might have unanticipated consequences. Worse, you may be perplexed as to why your score has plummeted and what you may do to improve it.

Let's look at some of the reasons why your credit score has declined and what you can do to improve it. Don't worry; while the prospect of a low credit score may be frightening, you have power over it, and this article will explain why and how.

WHAT WERE THE CAUSES OF YOUR CREDIT SCORE DECLINE?

You've skipped a payment or are behind on a payment

Life has a tendency of getting in the way. While you are quite regular in making your payments on time, there are those months when you either forget due to a busy schedule or other financial responsibilities force you to miss a payment. Due to the fact that late payments account for a big amount of your credit score, this can result in a drop in your credit score.

The amount you can spend on your credit card has been reduced.

Credit card issuers have the right to reduce your credit limit, particularly if you have a history of late payments. This could explain the reduction in your credit score because it raises your debt-to-credit ratio.

It's best to keep this at 30 percent or less of your credit limit.

You've recently closed a credit card

While you may have ripped up a card and declared that your shopping addiction was over, canceling an account isn't always a good idea. It is a mistake to believe that canceling a credit card will benefit you.

This may seem counterintuitive, but paying off your credit card in full while keeping the account open is the best option. Put your card in a drawer or only use it when necessary.

Have you applied for a new credit card?

If you've applied for a new credit card, a home loan, or any other type of loan, your credit score may suffer as a result. It's unfortunate, but it's unavoidable.

A "hard pull" occurs when a card issuer examines your credit report, which might result in a small decline in your credit score regardless of whether you are authorized for the credit card.

I made a significant purchase

While you are given a credit limit, it is never a good idea to use your credit card to its maximum limit or even near to it. Especially if you've made a huge buy all at once.

This demonstrates that you are not properly using your card and may indicate to credit bureaus that you have no intention of paying off your credit card or that it will be difficult to do so in a timely manner.

Theft of a person's identity might have a negative impact on their credit score.

Even if you think to yourself, "I didn't make these purchases; someone else did," you may still be responsible for the costs. Your credit score will suffer as a result of identity theft. Check your account on a regular basis to guarantee that all of the purchases on your card were made by you.

Have you ever paid off a loan?

I'm sure you're thinking something along those lines. You've just paid off a loan ahead of schedule. You achieved a long-held ambition. Exceptional work! You don't have to be concerned about carrying that burden on your shoulders any longer. Your credit score may suffer as a result of anything like this.

Errors on Credit Reports

People and technology are both faulty in the end. Mistakes are bound to occur. Your credit score might be harmed if an error occurs, even if it was not your fault in the end. It's aggravating, especially when you've been doing such a fantastic job of maintaining an excellent credit score.

Paying off an installment loan early won't necessarily help your credit score, and keeping it open for the duration of the loan may be a better option.


HOW CAN YOU IMPROVE YOUR CREDIT SCORE?

So your credit score isn't quite where you expected it to be. As previously said, there is no need to be concerned. Don't make the mistake of assuming that you'll always be at this level for the rest of your life.

There is no car that is brand new. There isn't a single good house in the suburbs. You can improve your credit score, and we'll go through how to do so in this section since it is achievable.

Pay Your Bills On Time

This is a case of 'hitting the nail on the head,' but if it wasn't clear before, you should make every effort to make your payments on time. Even if you pay $5 more than the minimum and pay on time for a period, it is preferable to pay on time than to let your payments accumulate.

Don't overuse your credit card

The thought of using a credit card is appealing. You don't have enough money in your bank account to buy those new shoes, but your credit card has room.

So, you've got yourself a pair of shoes. After that, you get a jacket. Then you pay for a nice dinner with your pals.

Overusing your card on a regular basis is not a good thing, so keep track of how often you swipe that card.

Keep your credit cards open

As previously stated, closing a credit card and not allowing oneself to be tempted may appear to be a smart option. In this manner, you are causing more harm than good. Keep your credit card in your wallet and be aware of when you should and shouldn't use it.

Errors in credit reports should raise red flags

If you notice something on your credit report that doesn't appear to be correct, don't let it linger. Dispute this inaccuracy before it has a negative impact on your credit score.

Applying for a loan is not a good idea

Do not apply for a loan while you are working to improve your credit score. This may appear to be a plausible option for getting out of credit card debt, but it will lower your credit score. Hold off on any loans while you work to improve your credit score and pay off your bills.

Increase Your Credit Line Request

As previously said, maxing out your credit card is not a good idea. Requesting a credit line increase may seem enticing, but you should take advantage of the possibility. Your credit card debt will be further away from the maximum, and your credit score will not be jeopardized.

Engage the services of a credit repair company.

When you're confused how to improve your credit score, it's time to hire a credit repair firm. These are the professionals who make a livelihood doing this.

While you may feel as if you are at a loss for what to do and that your wheels are spinning in place, a credit repair firm will provide a personalized solution to meet your specific needs and assist you in moving forward. You can breathe a sigh of relief knowing that these professionals will get you back on track.

When it comes to raising your credit score, keep in mind that it is a marathon, not a sprint. The results will take some time to appear, which may be frustrating but should actually be encouraging.

While you may not notice results right immediately, you should know that you are doing the proper measures that will pay off in the long run. You will be on your road to a fixed credit score and putting bad credit behind if you use the tips provided above in conjunction with a credit repair firm.

Related Articles:

https://thephenixgroup.com/how-much-does-a-charge-off-affect-my-credit-score

https://thephenixgroup.com/how-does-lexisnexis-tie-into-the-credit-repair-process

https://thephenixgroup.com/everything-you-need-to-know-about-national-credit-systems

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