If you’re someone who monitors your credit score regularly, it may surprise you to see an unexpected credit drop in your credit report.
Having the financial knowledge to understand what affects your credit rating can help you improve your credit score while also putting your mind at ease.
Here are five reasons why your credit score may have dropped recently and how to rectify or prevent them.
You have late or missed payments
Your payment history is the most crucial element of your credit score.
It’s vital to your credit score to pay off your bills on time. Your credit report logs late payments, which can negatively affect your score.
To avoid late payments, ensure to set reminders to pay bills or set up auto withdrawals to guarantee your bills are always paid on time.
Your credit limit has dropped
A sudden drop in your credit limit may increase your credit utilization ratio – how much debt you have to credit available. Using up most of your available credit can negatively impact your score.
Either pay off some debt or ask for a credit limit from your bank.
You recently closed a credit card
Like above, closing a credit card can reduce the amount of available credit, increasing your credit utilization ratio.
You recently applied for more credit
Credit checks, where financial institutions make a credit score inquiry, can negatively impact your credit score.
To avoid multiple credit checks, don’t apply for numerous credit products at one time.
You were a victim of identity theft
A fundamental reason to monitor your credit report regularly is to keep an eye out for suspicious activity.
A significant unexpected drop could indicate that someone else has taken out credit products in your name and taken on a large amount of debt.
Curious about what to do if you notice a drop in your credit score?
You can take several steps to improve your credit score, such as ensuring to pay your bills on time and using your credit cards sparingly.
If you need access to a fast online loan, iCASH offers instant, bad credit, and payday loans.
Even if your credit score drops, you can access instant loans with iCASH. Visit icash.ca to get started.