What Makes Your Credit Score Go Down?

If you’re wondering what makes your credit score go down, you’re not alone. Many people don’t know the answer to this question, but it’s actually quite simple. There are a few things that can negatively impact your credit score, and we’ll go over them in this blog post.

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late or missing payments

One of the things that can negatively impact your credit score is late or missing payments. This can include things like credit cards, utilities, rent, and more. If you’re behind on any of these payments, it’s important to catch up as soon as possible. Additionally, you should try to avoid late or missing payments in the future to keep your credit score high.

mortgage

Your mortgage is one of the biggest factors in your credit score – in fact, it can make up to 35% of your score. That’s why it’s so important to make your payments on time and in full each month. If you miss a payment or make a late payment, your credit score will take a hit. The same is true if you stop making payments altogether and end up in foreclosure.

auto loan

One of the factors that can weigh heavily on your credit score is your history of making timely payments on your debts. This includes things like credit cards, mortgages, and, as you might guess, auto loans.

If you have an auto loan and you’re behind on your payments, or if you’ve missed payments altogether, it’s going to have a negative impact on your credit score. The extent of the damage will depend on a number of factors, including how late the payments are and how much you owe on the loan.

Making late payments on an auto loan can also lead to problems with the lender, including repossession of the vehicle. So if you’re having trouble making your payments on time, it’s important to reach out to the lender as soon as possible to try to work out a solution.

credit card

One major factor that can lead to a drop in your credit score is late or missing payments on your credit card. If you have a history of making late payments, this can negatively impact your score. If you’re trying to improve your credit score, it’s important to make all of your payments on time.

Missing a payment entirely can have an even more negative effect on your score. If you’re struggling to keep up with your payments, consider talking to your credit card issuer about ways to make things easier. You may be able to set up automatic payments or extend your grace period.

Another factor that can cause your credit score to drop is maxing out your credit card. This means you’re using up all of the available credit on your card. When you max out a card, it shows lenders that you’re relying heavily on debt, which can be a red flag. If you’re trying to improve your credit score, pay down your balances so you’re using less than 30% of the available credit on each card.

maxing out credit cards

Maxing out your credit cards can negatively impact your credit score in several ways.

First, it lowers your credit utilization ratio, which is the amount of available credit you’re using. Credit utilization is one of the biggest factors in your credit score.

Secondly, maxing out your cards can signal to lenders that you’re struggling to manage your debt. This could make them less likely to approve you for new loans or lines of credit in the future.

Finally, maxing out your cards can lead to higher interest rates. When you carry a balance on your cards from month to month, you’re charged interest on that balance. The higher your balance, the more interest you’ll pay. So if you’re regularly maxing out your cards, you could end up paying a lot of money in interest charges over time.

high balances

High balances on credit cards and loans can have a negative impact on your credit score. Your credit utilization ratio, which is the percentage of your total credit limit that you’re using, is a factor in your credit score. If you have a high balance on a credit card or loan, your credit utilization ratio will be higher, which can negatively impact your score.

Paying your bills on time is the most important factor in maintaining a good credit score, but keeping balances low is also important. If you have a high balance on a credit card or loan, you should try to pay it down as soon as possible to avoid damaging your score.

opening too many new accounts

Opening too many new accounts in a short period of time can ding your score. It’s not just about the number of new accounts, but also about how long ago they were opened. A FICO® Score considers both.

● Length of credit history: The longer your history of on-time payments, the better your score. The scoring formula looks at both the age of your oldest account and the average age of all your accounts. So, if you close an old account or open a new one, it can temporarily lower your score.

● New credit: Opening several credit cards at once, seeking out new loans or lines of credit, or applying for multiple auto loans in a short period of time can make you look like more of a risk to potential lenders. That’s because people with a lot of recent applications for credit are sometimes more likely to default on their debts than people who don’t have any recent credit applications.

closing old accounts

One factor that can cause your credit score to drop is closing old accounts. If you have a credit card that you no longer use, you may be tempted to close the account to avoid fees or because you don’t want the temptation of having access to credit. However, closing an account can actually cause your credit score to drop because it lowers your credit utilization ratio. This is the amount of debt you have compared to the amount of credit available to you and is one factor that is used to calculate your credit score. Therefore, even if you don’t use the card, keeping the account open and active can actually help your credit score.

hard inquiries

In general, credit scores will take a small hit when you have a hard inquiry on your report. Other factors that can affect your credit score include:

-Your payment history
-The amount of debt you have
-The length of your credit history
-The types of credit you have
-New credit accounts