Why did my credit score go down when nothing changed?

Your credit score is an important part of your financial life. You’re happy when it goes up, but it’s frustrating to see it go down, especially if your credit score is going down when nothing has changed in your finances. This may make you wonder, “Why did my credit score go down when nothing changed?”

There are many reasons why your credit score could drop unexpectedly. Some are harmless, while others may require a quick fix.

Components of your credit score

To understand the different ways your credit score can drop unexpectedly, it’s important to understand how credit scores work.

Your credit score is made up of five factorsin order from most important to least important:

  • Payment history
  • Amount owed/loan drawdown
  • Age of the loan
  • Credit mix
  • New credit

Changes in any of these factors can cause your score to drop.

Why your score might go down when nothing has changed

There are a number of explanations for a surprising drop in your credit score.

Woman at laptop

Using a different assessment model

One of the simplest and least worrisome reasons why your credit score could drop unexpectedly is because you’re not comparing scores that use the same model.

When people think about their credit score, they often think of it as a single number, but that’s not entirely true. There are many different credit scoring models.

Two popular credit scores are FICO score and VantageScore. Both look at similar factors but weigh things slightly differently.

Even within FICO Score and VantageScore systems, there are differences. For example, FICO has FICO 8, FICO 9, FICO Auto Score, FICO Bankcard Score, and more. All these scores are used by different lenders for different purposes.

Even if you are looking at two scores calculated using the same model, if the information entered into the formula is different, the answer will be different. Each of the three major credit bureaus may have slightly different information about your credit interactions based on which bureaus your lenders report to.

If you are looking at a score calculated using data from Equifax and comparing it to a score using data from TransUnion, there may be a slight difference between the two. If you’re comparing VantageScore (often used by free credit score providers) to your FICO score, there can be a significant difference.

If you’re asking yourself, “Why did my credit score go down when nothing has changed?” the first step is to make sure you’re comparing scores of the same type.

Unexpected hard question

Understanding the reasons for a credit score drop is critical, especially if you find yourself asking, “Why did my credit score drop when nothing has changed? One common but often overlooked reason is the effect of hard questions.

Whenever you ask oa credit card or loan, the lender will check your credit score with one or more credit bureaus. When this happens, the credit bureau will place this information on your credit report. This is called a tough questionand every hard inquiry on your credit report can cause it to drop a few points.

A loan isn’t the only thing that can lead to a hard inquiry about your credit.

Renting a car, especially if you pay for the rental with a debit card or cash, can lead to a difficult inquiry. The rental company will check your credit to make sure you will be able to pay for any damage or other problems with the card.

Signing up to a new mobile phone plan can also lead to a difficult inquiry if you’re trying to get a monthly contract. A cell phone company wants to make sure you pay your bill before offering service.

Asking your existing credit card provider for a credit limit increase or applying for a business credit card can lead to hard inquiries about your personal credit.

If your credit score dropped because of an unexpected hard inquiry, the impact will likely be small and fade away quickly. If you can confirm that the query was actually caused by your actions, it’s not a major problem.

Co-signing the loan

A co-signer on a loan can be another reason why your credit score could drop when nothing has changed. When you co-sign the loan it can help someone else get a loan they wouldn’t otherwise get, or secure a lower interest rate. This is because you are promising to pay the debt on their behalf if they are unable to repay.

Because you share responsibility for the loan when you co-sign, the lender will want to check your credit, which means a hard inquiry will appear on your credit report. Your credit balance and payment history will also appear on your credit, which can also cause it to drop a few points.

The old account has been closed

If you are confused by the question, “Why did my credit score go down when nothing has changed?” consider the impact of old credit scores. Maybe you have an old credit card lying around that isn’t doing much these days. After a long enough period of inactivity, your credit card issuer may decide to close the card because you are no longer making purchases on it.

Closing an old account, either intentionally or through inaction, can cause your credit score to drop, sometimes by a lot.

First, closing an old account reduces the age of your credit accounts. The older your average credit score is, the better your score will be. For example, if you have three cards, one 10 years old, one 4 years old and one 1 year old, if you let the oldest one close, the average age of your accounts will drop from 5 years to 2.5 years.

This can lead to a big drop in your score.

Closing your account will also reduce your available credit, which can increase your credit utilization ratio. Yours loan utilization ratio is the percentage of your total credit limits that you use. The more credit you have available, the more balance you can build without significantly lowering your score. Taking away some of your available credit means a lower card balance will have a bigger impact on your score.

Your credit card balance has gone up

This is another explanation that has to do with your credit utilization ratio. If you spent a little more than usual on your credit cards this month, it could be causing your credit score to drop.

When your card statement is closed, your credit card issuer will send your account details, including your balance, to the credit bureaus. Even if you pay off the balance in full, the credit bureaus still see this higher balance, which can lead to higher credit utilization.

The good news is that credit bureaus don’t track your credit history. Once you pay off the card and the card issuer reports the next month’s balance, your score will return to normal if your balance returns to normal. However, this means that large purchases on a credit card can cause a temporary drop in your credit.

If you are planning to apply for a large loan, such as a car loan or mortgage, it is important that you try not to use your credit cards for large purchases, as this can cause your credit score to drop, leaving you wondering, “Why is my credit score going down? when nothing has changed?”

A lender has lowered your credit limit

Credit card issuers usually don’t make changes to your card credit limit unless you request a credit limit increase, but they have the right to adjust your credit limits at will. This can mean their increase or decrease.

If one of your credit card issuers lowers the credit limit on one of your credit cards, it will reduce your total available credit. As well as making larger than normal purchases with your credit card, which can cause your credit utilization to increase, which will cause your score to drop and leave you wondering why your credit score dropped when nothing has changed.

Error on your credit report

Credit bureaus are not perfect. They make mistakes and there may be inaccurate information on your credit report. Adding an account that isn’t yours, marking a timely payment as late, or entering an incorrect balance or credit limit number can all cause your credit score to drop.

If your credit score has dropped and you’re wondering, “Why did my credit score drop when nothing changed?” it’s a good idea to check your credit from time to time to make sure your credit report is error-free. Every bureau is required by law to give you a free copy of your credit once a year, and there are many other free services you can use to monitor your credit.

If you find an error, contact the credit bureau question it. Each office has a slightly different process for reporting errors, so make sure you follow the appropriate process based on the office that has inaccurate information.

Identity theft

Dealing with the confusion of “Why did my credit score go down when nothing changed?” can sometimes be traced back identity theft, a serious problem that affects many people. More than 300,000 Americans fall victim to identity theft scams each year.

If someone steals your identity, they can do a lot of things to hurt your credit score. Applying for new loans in your name and racking up debt are among the most common ways identity thieves damage your credit.

If you think you are a victim of identity theft, the first thing you need to do is contact the credit bureaus and place a fraud alert on your credit. This will help prevent thieves from opening more accounts in your name. You will also want to file a police report. The FTC has identity theft reporting page which can generate a recovery plan for you.

Contact any companies that the scammers opened accounts with and let them know that the accounts were not created by you and that you are a victim of identity theft. You should also check your credit card and bank account statements to ensure that no one has accessed these accounts without your permission.

Once you’ve recovered, consider signing up for an identity or credit monitoring service to try to prevent identity theft from happening again.

Derogatory marks added to your report

One of the most common reasons for your credit score to drop is a derogatory mark on your credit report. If you’re asking yourself, “Why did my credit score go down when nothing changed?” it’s always possible that you missed a payment and it was reported as late.

Check your financial records to make sure you haven’t missed anything…

What to do if your credit score drops unexpectedly

Many people often ask, “Why did my credit score go down when nothing changed?” If you notice an unexpected drop in your credit score, the first thing you need to do is find out how much it has dropped. A minimal drop is nothing to worry about. Just watch and make sure the trend doesn’t continue.

If the drop is significant, you’ll need to find out what the root cause is.

The best way to do this is to check your credit reports. This will tell you if there are any real changes in your credit history that could lower your score. You will need to know how to get a credit report and how to read a credit report.

Some of the things that can cause your credit to drop are no big deal. For example, seeing a score created using a different model or a slightly higher credit card balance in one month isn’t much cause for concern.

Some changes require immediate attention. If you notice errors on your credit report, you must report them to the credit bureaus as soon as possible. Identity theft also requires an immediate response.

If your credit score has dropped when nothing has changed in your financial life, there’s no need to panic. You have to find out what happened and why!

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