If you’re wondering why your credit score is going down, you’re not alone. Here are some possible reasons why your score might be lower than it was before.
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Check for Recent Credit Inquiries
If you see a sudden drop in your credit score, one of the first things you should do is check for recent credit inquiries. If you see any, they could be the reason why your score has gone down.
Inquiries are made when someone (usually a lender) requests your credit report. Every time this happens, an inquiry is added to your report. Too many inquiries can have a negative effect on your score.
If you see an inquiry that you don’t recognize, it could be that someone has fraudulently accessed your report. This is a serious matter and you should report it to the relevant authorities immediately.
Review Your Credit Utilization
If you have more than one credit card, make sure you’re not using too much of your available credit on any one card. Using more than 30% of your credit limit can ding your score, even if you pay off the balance in full each month. So if your limit is $1,000, try to keep your balance below $300.
Check for Negative Items on Your Credit Report
One common reason your credit score may be going down is because you have negative items on your credit report. These items could be anything from late payments to collections or even bankruptcies. If you have any of these items on your report, it’s important to take action to remove them.
There are a few ways you can go about removing negative items from your credit report. One way is to dispute the items with the credit bureau. This process can be a bit complicated, but if you’re persistent, it can be worth it. Another way to remove negative items is to wait for them to fall off your report. Most negative items will only stay on your report for seven years, so if you can wait it out, they’ll eventually disappear.
If you’re trying to improve your credit score, it’s important to keep an eye on your credit report and make sure there are no negative items dragging it down.
Check Your Public Records
If you find a mistake on your credit report, dispute it with the credit bureau. If you have a judgment or lien against you, ask the court clerk to update your records to show that the debt has been paid. These are just a couple examples of items that can drag down your score, so if you see them, don’t hesitate to take action.
Check If You Have Too Many Credit Cards
One common reason your credit score might start to dip is because you have too many credit cards. If you have a lot of credit cards, it can make you look like a bigger risk to creditors. It can also be difficult to keep track of all your cards and make sure you’re using them all responsibly.
If you think having too many credit cards is affecting your score, try closing some of them. You should also make sure you’re using all your cards wisely. That means paying off your balances in full every month and not using more than 30% of your credit limit on any one card.
Check If You Have a Good Payment History
One of the biggest factors that determines your credit score is your payment history. Simply put, this is a record of whether you have made your payments on time.
If you have missed a payment or two, it’s not the end of the world. But if you have a habit of making late payments, that will reflect poorly on your credit score. So, if you’re wondering why your credit score is going down, one possibility is that you have recently missed a payment or made a late payment.