August 23rd, 2012
Why Did My Credit Score Drop?
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It’s never a fun surprise to see that your credit score dropped. Unfortunately, you can’t always fix it right away, but you can sometimes figure out what might have caused it.
Score drops usually break down into three categories:
- Things you did.
- Things you didn’t do.
- Things someone else did.
Here are some of the most common causes of drops:
- You closed an account, either by paying off a loan, or closing a credit card. Your credit history and available credit will change as a result.
- You opened, or tried to open a new account. Inquiries and new accounts will ding your score too.
- You’re spending more or paying off less. If your credit utilization at the point your creditors reported to the bureaus is higher than normal, your score might’ve dropped. If you missed a payment, that might’ve done it too.
- There’s a new derogatory mark on your history. Collections, tax liens, defaults… all these can do a number on your credit score.
- And of course, there could be a new mistake on your report. The best way to figure out what’s going on is to pull your full credit reports for free from annualcreditreport.com. If there’s something wrong in your report, dispute it, and your score should improve.
It’s good to keep in mind that some fluctuations in your score might occur because there are a number of factors influencing it, but you shouldn’t be too concerned over small drops over a short amount of time.
To monitor for changes in your credit report that might affect your score, enroll in Credit Karma’s free credit monitoring and keep an eye on your credit notifications. This can help you pinpoint the reason for score drop.
Overall, continue practicing healthy financial habits and your score should recover.
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