4 Reasons Credit Scores Drop
You've worked really hard and have been doing the right things, yet your credit score just dropped. What happened? The following list provides examples of actions that could cause your score to suddenly and dramatically drop:
You paid off a credit card, and then closed it. Depending on your situation, the account you closed could've been your oldest credit account with the highest credit limit. When paying off credit card accounts, keep the accounts open and use them responsibly. This will positively impact the credit ratio and credit history portion of your credit score. Besides, closing an account doesn't make it go away. Close accounts will still show up on your credit report.
You maxed out a credit balance. By maxing out your card, your overall credit ratios were adjusted. Keep balances as low as possible and try to pay off your balances in full each month.
You opened several new accounts in a short amount of time. If you are buying a new home at new furniture and appliances, or it's a holiday shopping season, sometimes it can be tempting to open store credit cards to take advantage of additional savings for cardholders. While the savings may be nice, you will impact your credit by changing the length of your established credit history and the amount of debt you owe.
You received a 30-day late record on a credit report. Unfortunately, some creditors do not distinguish the difference between one day and 30 days late on payments. Pay your monthly bills on time every time to avoid this penalty. Depending on which credit cards you have, you could suffer an additional penalty for paying late, even just way time. The additional penalty, called the universal default clause, states all your interest rates on all your credit cards could increase from missing one payment on any card even if you're in good standing with your other accounts.