If you're wondering "why did my credit score drop?" it's a good idea to take a look at your report and look for red flags. Negative factors can include missed payments and requests for credit. If you see a recent decrease in your score, you should consider disputing it.
For hard inquiries
In a variety of ways, hard inquiries can impact your credit score. They will show up on you credit report for two years depending on how many of them you have. You may also see a decrease in your credit score for several months or even a year. Your credit health and score will determine the extent of the impact, but it could be as high as ten to fifteen points. Depending on the situation, one to two inquiries may not be significant. However more inquiries can make your credit profile look less risky.
Closing a Credit Card
Closing your credit card could have a negative impact on credit scores. This is because it lowers the average age of your accounts. In certain cases, you may be able reduce the effect by repaying the balance on your other cards. Understanding your credit score and the reasons it will be affected can help you make more informed decisions about closing an account.
Medical debt
If you have a history of medical debt, your credit score may have taken a beating because of unpaid medical bills. There are steps that you can take to improve your credit score. First, check to see if your insurance covers your medical debt. Find out which procedures you are covered by your insurance policy, if so.
Late payments
Late payments hurt your credit score, but they can be avoided by paying off your bills as early as possible. Your credit score will not drop if you delay paying your bills for more than 30 days. You can reach out to your creditor to discuss a repayment plan. To avoid missing payments, you can set up automatic payments or reminders. Avoid large credit purchases as this will increase credit utilization. This ratio is responsible for 30% of your FICO score. The lower your credit utilization ratio, you will get a better score.
Inaccuracies with credit reports
Inaccuracies in credit reporting can impact your credit score. You can reach the credit bureaus online. For a response, you should expect to wait for thirty to forty five days. However, many disputes are resolved within two weeks.
Identity theft
When someone steals your identity, it can severely affect your credit score. You can have this effect from a variety of reasons. Credit utilization ratio is one of these most important factors. Your score may drop 100 points if your credit utilization ratio exceeds 50%. It is vital to keep your credit utilization rate below 30%. You can repair your credit score by taking steps to correct identity theft.