Have you checked your credit score recently? Are you shocked to see that is has fallen from 853 to 600? Are you unsure as to why it has dropped this much? A drop in your credit score is never fun, nor is it good. If you have no idea why it has fallen, then it may be due to one of these reasons.
Your credit score may have dropped due to the following reasons
The most common reason why a person’s credit score has fallen is due to a missed payment. This leads to a default on your credit file. For example, If you miss a mobile phone payment, and do not pay it within a certain time period, the telecommunications provider can request for a default to be placed on your credit file. They must, however, following the correct reporting procedures to place this. For this reason, you must stay up to date with all your payments.
Made a large purchase
If you have overspent on a large purchase, your credit card balance can suffer. Fortunately, this is an easy fix. Pay off any outstanding balances as soon as possible on your credit cards. The longer you leave them, the more likely you are to either forget about them, ignore them or completely miss the payment. This will lead to a default which will mean a drop in your credit score.
Forgot to pay an account
Do you have any non- credit account in use? If so then make sure that you have not missed payment as that amount may be sent to a collector. It will also appear on your credit report and can drag your score down.
Too many hard inquiries
How many times have you applied for a credit card? If the answer is more than once in the space of a week; then chances are that your credit score has been affected. Inquiries are a crucial part of your credit score. Did you know that each time you apply for credit, an inquiry is recorded on your file? Lenders will look at these inquiries when assessing your application. Refrain from applying for new credit in short time frames.
More importantly, make sure that you check your credit file before applying for any credit. This will reduce the risk of placing too many hard inquiries and dealing with loan rejection. Learn what’s in your credit report before you start applying.
Canceled a long term credit card
The simple act of closing a long term credit card can actually negatively impact your creditworthiness. This will also decrease if you close an account that has an existing balance on it. Lenders will look at your ability to demonstrate long term credit stability. If you can positively repay a loan over time, it will improve the age of your creditworthiness.
Humans are naturally riddled with errors. This can impact your credit score. For example, a bank employee may enter the wrong contact information or a telecommunication provider may incorrectly report an error. In these instances, you may need to speak to a credit assessment specialist. They will analyse your credit file and let you know how you can remove any negative issues.