Why did my credit score drop?

1. 1Higher reported balances. Card issuers usually report your statement balance. A big purchase, even if you pay in full, can raise reported utilization for a month.
2. 2A late payment reported 30 or more days past due. See fixing an inaccurate late.
3. 3A new collection or charge-off.
4. 4New hard inquiries from applications. See hard vs. soft inquiries.
5. 5A new account that lowers your average account age and adds an inquiry.
6. 6A closed card or lowered limit, which reduces available credit and can raise utilization.
7. 7A paid-off installment loan. Closing your only installment account can slightly change your credit mix. It's still usually good to be debt-free.
8. 8Different score or bureau. You might be comparing a score from a different model or bureau.
9. 9An error or fraud. An account you don't recognize or a balance that's wrong.

If none of the common causes fit, look for these:

• You were removed as an authorized user. That card's history and limit can leave your file, which can raise utilization and shorten your history. See the authorized user guide.
• A positive account left your report, for example an old closed account that stopped being reported, or an account deleted after a dispute. Losing a long, clean account can lower average age or available credit.
• A balance transfer or consolidation. A new card adds an inquiry and a new account, and moving several balances onto one card can push that card's utilization high even if your total debt didn't change.
• You're comparing different scores. A score from a different bureau or a different model version isn't a drop. Compare like with like. See why your reports differ.
• Someone else's data is in your file. Unfamiliar accounts, addresses, or inquiries can point to a mixed file or identity theft.

• Pull the report from the bureau behind the score that dropped (free weekly at AnnualCreditReport.com).
• Look for new accounts, new inquiries, changed balances, new late marks, and new collections.
• Check the reason codes or key factors many score providers list.
• Compare with the other two bureaus to see if it's everywhere or isolated.

Say you have one card with a $2,000 limit and you normally carry about $200, which is 10% utilization. In March you book $1,600 of travel on it and pay it off on the due date in April. The issuer reports your March statement balance of $1,800, so your reported utilization jumps to 90% for that month, and your score dips, even though you never paid a cent of interest.

When the April statement closes with your usual $200 balance, the next report shows 10% again and the dip generally reverses, because most scoring models don't remember past utilization. The lesson: if you have an application coming up, pay large purchases down before the statement closing date, not just by the due date. The utilization guide explains the timing in detail.

1. 1Pull the report the lender will use, or all three if you don't know, and find the change.
2. 2Pay revolving balances down before statement dates for the next one or two cycles.
3. 3Hold off on new applications, including store cards offered at checkout.
4. 4Dispute anything inaccurate now. Bureaus generally have 30 days to investigate, so start early. See how disputes work.
5. 5Ask the lender about timing if you've just fixed something. Mortgage lenders in particular can sometimes update a report after a correction.

• Don't close old cards in a panic. Closing a card removes its limit and can raise utilization.
• Don't open new credit to "fix" a drop. New accounts and inquiries usually add a small dip of their own.
• Don't pay anyone who promises to restore a specific number of points or to remove accurate negative information. That's not something anyone can lawfully promise.
• Don't ignore an unfamiliar account. Treat it as possible fraud until you've confirmed otherwise.

Checking your reports regularly, or using monitoring that alerts you to new accounts, inquiries, and balance changes, helps you catch problems before an application rather than after. CreditGod includes three-bureau monitoring and alerts with membership. See credit reports.

Not every drop needs a response. A dip from one high statement balance, a single new inquiry, or a newly opened account is usually temporary and works itself out as balances fall and accounts age. Your best move is often to keep paying on time and avoid new applications.

Other changes deserve action right away: a late payment you believe was on time, a collection you don't recognize, a new account or inquiry you didn't open, or personal information that isn't yours. Those can be errors or signs of fraud, and the sooner you dispute them or freeze your credit, the less they can affect an application.