If you are someone who regularly monitors your credit score, you may be surprised to see an unexpected drop in your credit report.
Having the financial knowledge to understand what affects your credit rating can help improve your credit score while giving you peace of mind.
Here are five reasons why your credit score may have dropped recently and how to fix or prevent them.
You have late or missed payments
Your payment history is the most crucial element of your credit score.
Paying your bills on time is essential for your credit score. Your credit report records late payments, which can negatively affect your score.
To avoid late payments, be sure to set reminders to pay bills or set up automatic withdrawals to ensure your bills are always paid on time.
Your credit limit has dropped
A sudden drop in your credit limit can increase your credit utilization rate, which is the amount of debt you have to credit. Using most of your available credit can negatively impact your score.
Pay off a debt or request a credit limit from your bank.
You recently closed a credit card
As above, closing a credit card can reduce the amount of credit available, thereby increasing your credit utilization rate.
You recently applied for more credit
Credit checks, where financial institutions conduct a credit score inquiry, can negatively impact your credit score.
To avoid multiple credit checks, do not apply for multiple credit products at the same time.
You have been the victim of identity theft
A fundamental reason to regularly monitor your credit report is to keep an eye out for suspicious activity.
A large, unexpected drop could indicate that someone else has purchased credit products on your behalf and incurred significant debt.
Curious about what to do if you notice a drop in your credit score?
There are several steps you can take to improve your credit score, such as making sure you pay your bills on time and using your credit cards sparingly.
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Even if your credit score drops, you can access instant loans with iCASH. Visit icash.ca to get started.