Credit

What makes your credit score go down?

Getting your credit score down is no doubt a serious issue, but nowadays majority of the people are facing it. If you are there then most probably you will be facing this issue and be looking for the reason that has brought your credit score down. Well, we would like to tell you that there are number of reasons that can be responsible for your bad credit score. However, here we are mentioning the most common reasons.

  • Delay in the payments

Payment history makes a significant impact on your credit score. None of your payments should be late than 30 days and if it is, then these payments will be reported to the credit bureaus and be listed in your credit score. And once they are shown in your credit report, your credit score will be affected negatively.

  • Making expensive purchases through credit card

Another important factor that affects your credit score is how you are using your available credit. Making a big purchase can affect your credit card balance and thereby, the credit score will also be affected. For an instance, after making a big purchase, you can experience a great drop in the credit score even if you have paid the balance before a month. This will happen in the case when your balance will be reported before you pay the amount.  

  • Unpaid accounts

What most of the people think is that it is enough to pay the credit card balances and loans for securing good credit scores. But, it is not the case; you are required to pay all your accounts because they can be sent to a collection agency. And once they are sent, they will get listed on your credit report and your credit score will go down.  

  • Applying for a new credit card

If you are not aware, let us tell you that new credit report enquiries add up for 10% of your credit score. And if you are applying for a new credit card, then your credit score is going to be at risk. The effect of these inquiries will last for a year on your credit score.

  • Lowered credit limit

A lower credit limit is going to affect your credit score in the same way as making an expensive purchase. Low credit limit will result in the increased credit utilization which in turn will cause your credit score to go down.

Show More

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *