If your credit score has recently dropped, you’re probably wondering why.

There are many things that damage credit scores, some of which are outside of your control. First thing’s first: It’s key to get to the bottom of why your credit score dropped, then figure out a strategy to improve it.

Why Did My Credit Score Drop? 9 Common Reasons

There are quick ways to improve your credit score – and many aren’t as hard as you think. First, however, you have to determine why it took a dip.

1. Overusing Your Credit Limit

You should never use your entire credit limit. In fact, you shouldn’t even use half of it. Your credit utilization rate compares your total debt balances to your total available credit. It makes up 30% of calculating your credit score.

If you have to max out a credit card, take care to pay off your balance as quickly as possible. Even if your balance lingers for a few months, it will negatively impact your credit score. However, if you pay it off quickly enough, you’ll be back in good shape before your credit card company can report the large balance to the credit bureaus.

The Fix

Pay your credit balance down to 30% or less. For every $1,000 credit limit, only $300 should be your outstanding balance.

2. Making Only the Minimum Payment

Making minimum payments on your credit card statement may be tempting, but this strategy can damage your credit score. Considering your credit utilization mentioned above: Making minimum payments could hurt your score if the balance doesn’t remain at 30% or less.

The Fix

Only charge what you can afford to fully pay off each month (or what you know you can pay off quickly). Avoid charging large amounts and making minimum payments as it will take too long to pay the balance down.

3. Missing or Making Late Payments

Your payment history has the greatest impact because it makes up 35% of your credit score. Even one late payment can make your credit score drop fast.

Credit bureaus consider a payment “late” when it’s 30 days past the due date. If you miss a payment by a few days, it won’t hurt your credit score – but it’s never recommended to miss any payments by any number of days.

Credit bureaus also consider late payments in 30-day increments, so your credit score will be further affected for every additional 30 days a payment is late.

The Fix

Prioritize catching up on all of your payments, then stay consistent by paying your bills on time each month. Even if you’re only able to make the minimum payment, it’s better to make that minimum payment on time than to send in a late payment.

4. Closing Your Credit Card Accounts

Closing your credit card accounts may seem like a good idea since you’ll have less temptation to add to your debt – but it also damages credit scores in two different ways.

A. Could Shorten Your Credit Age

Your credit age makes up 15% of your credit score, and it can only be improved by time. If you closed an account you’d had since the beginning of your credit history, it would no longer be considered a factor in your credit age and would shorten your credit history significantly. There would be nothing to do but wait to make up for the time lost by closing that account.

B. Hurts Your Credit Utilization Rate

Closing a credit card eliminates that line of credit. Even if that card had no balance, that available credit was lowering your utilization rate. If you have other cards or accounts with high balances – and you cancel a credit card with no balance – your total utilization rate would increase. As a result, your credit score would drop quickly.

The Fix

Rather than closing your credit card accounts, keep your credit card account open but don’t use it (take the card out of your wallet and leave it in a desk drawer). This way, you’ll maintain your credit age and you won’t hurt your total utilization rate.

5. Marks On Your Credit Report

Having financial difficulty and not being able to afford your bills can certainly influence your credit score. These accounts may end up recorded as charge-offs, judgements, or foreclosures.

Times of financial hardship might include the following issues:

Unpaid Debts

Once payments are more than 30 days late, your credit score will drop.

Credit Overextension

If a credit line is overextended, credit utilization will spike and affect your credit score.


Filing bankruptcy may result from being unable to afford your cost of living and any debt that has accrued.

The Fix

Financial hardship can take time to work through, but you can minimize its effect on your credit if you address the initial factors right away. Consider speaking with your mortgage company or other lender to let them know about your situation. They may be able to work with you on creating a more flexible repayment plan.

During this time, you should eliminate any unnecessary spending and try to take on a side job so you can work towards affording your bills. Your efforts could help prevent a drop in credit score.

6. Not Using Enough Credit

Not using enough of your available credit can also damage your credit score.

The credit bureaus use your credit utilization rate to determine up to 30% of your credit score. If you have a $0 balance for an extended period of time, the credit bureaus may stop receiving updates about your borrowing history (which could hurt your credit score).

The Fix

If you haven’t used your credit card yet, make small purchases periodically and pay them off in full each month. This will keep your credit utilization rate low (even at 0%) while keeping your accounts open and active.

7. Applying for Multiple Lines of Credit Simultaneously

Applying for multiple lines of credit within a short period of time is considered a sign of financial distress – and it may cause your credit score to drop. There is, however, a difference between taking out multiple lines of credit and rate shopping.

Rate shopping is applying for the same type of loan (e.g. mortgage, car loan) with multiple lenders to see which will provide the best rate. If you do your rate shopping within 30 days, it will only count as one inquiry on your credit report and won’t significantly affect your credit score.

If, on the other hand, you apply for different types of credit lines (e.g. credit card, personal loan, car loan) within 30 days, the applications will count as multiple hard inquiries. This can significantly hurt your credit score.

The Fix

Only apply for lines of credit that you absolutely need and can use responsibly. If you’re rate shopping, complete it within 30 days and don’t apply for any other type of credit during this time. Don’t make it a habit to apply for every pre-approval or opportunity that comes your way, and ensure you’re applying for credit responsibly.

8. Discrepancies On Your Credit Report

Mistakes happen and that extends to lenders and credit bureaus. If your payment information is misreported, it could hurt your credit score before you realize it.

The Fix

Be vigilant and routinely check your credit report. There are a few free options for checking your credit report:

  • Once a year, pull your free credit report from each credit bureau at www.annualcreditreport.com.

  • Experian provides free credit reporting if you sign up.

  • Credit Karma offers access to your credit report for free after signing up.

  • NerdWallet also enables you to check your credit report free of charge.

Although these options don’t provide your credit score, they do provide a credit report. Using this information, you’ll be able to determine if there were any errors in reporting your borrowing and payment history.

9. Stolen Identity

Unless you notice your identity was stolen in the earliest phases, identity theft can do serious damage to your credit – long before you even realize it. Fortunately, the damage doesn’t last forever and it can be easy to reverse.

The Fix

If you notice credit activity that you didn’t authorize on your report, place an immediate fraud alert on your credit report and freeze your credit accounts. This will ensure that no one can do anything in your name without your approval (including yourself). You should also file an identity theft report with the FTC and dispute all accounts/activity on your credit report resulting from the theft.

If you apply for new credit, you’ll first need to unfreeze your credit report to allow the lender to check your credit score.

Easy Ways You Can Improve Your Credit Score

Improving your credit score isn’t as hard as it might initially seem. The key, however, is monitoring your credit report often and making wise financial decisions that affect your score.

Even if you’ve made a few mistakes, taking the right steps should show improvements each month. For best results:

  • Pay your bills on time (or make any late payments current).

  • Keep your credit balances at less than 30% of your credit line.

  • Monitor your credit for any errors and/or identity theft that could cause your credit score to drop.

With time and consistent effort, you can improve your credit score and receive more attractive financial options.

Ask An Expert Why Your Credit Score Dropped

How Often Does Your Credit Score Update?

Most credit scores are updated monthly (or every 45 days at most). Creditors report accounts to the credit bureaus on their schedule, so it varies by creditor.

Why Is My Credit Score Low After Getting A Credit Card?

Most consumers see a drop in their credit score after they get approved for a credit card for two reasons: The hard inquiry damages their credit score slightly and the ‘new credit’ lowers their credit age. This credit score drop is usually temporary though.

Does Playing the Lottery Online Affect My Credit Score?

The only way playing the lottery online will affect your credit score is if you use borrowed money and don’t pay the money back on time.