If you’re the kind of person who takes a keen interest in your finances and a big part of that is checking your credit score regularly, you’ve probably had that disheartening experience where you log on only to find that your score has seemingly inexplicably fallen. It can be really annoying when that happens, but like most things, it does happen for a reason and if you know what that reason is, you can be more vigilant in the future.
Here are some of the most common reasons for your credit score to fall. Do any of them apply to you?
Late or Missing Payments
Even if you think you’re totally on top of all your personal financial commitments and your monthly payments, it can be easy for it to slip your mind and when that happens, it could have a negative effect on your credit score, which is why it’s always a good idea to set up reminders on your phone or automate the payment so that it doesn’t happen in the future. If you have forgotten to make a payment, it’s also a pretty good idea to still pay it even if its really late because if you wait more than 30 days to pay, your score could fall even lower than it already would.
Your Credit Use Has Soared
You might think that because the lenders have deemed it fit to give you a certain amount of credit, there should be no problem if you use it to it’s fullest. However, if you’ve previously been using your credit cards very little and you suddenly decide to go on a spending spree, it could cause you some problems because the lenders might think that you are unable to manage your credit properly and they may even think you won’t be able to repay new debts. Ideally, you should keep your credit usage under the 50 percent mark of the total available to you to avoid this.
Opening a New Line of Credit
If you apply for a new credit card that will be noted on your file as a hard search and that could see your score fall by a few points. It is much more likely to fall significantly if you make lots of these hard searches in a short amount of time because it may look like you’re desperate for credit.
If you move around a lot, the fact that you have several addresses linked to your credit score, which you can see at https://www.transunion.com/ could be a problem especially if you break leases, stop getting your mail and miss unexpected payments or appear very unstable, So, although it can be hard to avoid moving, at the very least, keep your commitments and leave a forwarding address!
If you default on a line of credit and stop paying completely, it’s pretty obvious your credit score will plummet eventually. When this happens, you may need the help of a company like http://repair.credit/best-credit-repair-companies/ to help you sort things out. It’s worth doing that though because if you have a very low credit score you could be denied home loans, car loans and even jobs in the future.
Now that you know the most common causes of falling credit scores, you can take action to avoid them by being even more careful in the way you use credit, approach lenders and organize repayments.