What Causes Responsible For A Drop In Credit Score?
The factors listed above are often related to your credit score. For example, if you pay late, apply for multiple credit/loan lines in a short period, and/or increase your total debt amount, you may find that your credit score has worked, and as a result, you have lower credit points.
If you have recently noticed a decrease in your credit score. It may be for one or more of the following reasons:
Delayed or Lost Payment
Payment history for all types of debt has a huge impact on your credit level. Over time, payments will have a profound effect on your credit level. If you have been late for 30 days or more, your credit card company or lender may report the problem to Equifax and/or TransUnion. This may automatically reduce your credit score. After 60 to 90 days, the negative impact on your credit score increases.
Even making a small payment on time can prevent this problem. If you are not on the ball every time you talk about making your payments on time. Then consider setting up an automatic payment for your credit card debt, even if it’s just $ 20. That way, you will not be suspended from the facility for unnecessarily late payment.
Make Great Purchases With Credit
Your total credit rating compared to how much debt you have is an important part of your credit score. If you use more credit, your credit rating decreases. Whether you decide to use a significant portion of your credit to pay for home rents or to buy more large ticket items (e.g. appliances, television, laptop, cell phone, etc.). A debt reduction may follow if you do not pay the full amount.
Your Credit Limit Reduces
Reducing your credit limit can affect your credit score because it affects your credit rating. The borrower may decide to lower your credit limit due to payment problems or salary changes. It may be because the credit card or credit line not being used properly.
Your Account Sent to Collections
If you are unable to pay the balance in the account the company decides to send your information to the collection agency. Credit reporting agencies will consider you a serious credit risk, which will reduce your credit score. If the lender sends your account in batches, it may take up to six years for this information to be removed from your credit report.
You have applied for additional credit and your creditors have checked your credit score
It may seem wrong, but your credit score will taken into account when you apply for a new loan. And the bank or lender examines your credit report to assess the risk posing as the borrower. As mentioned earlier, when a lender looks at your credit report because you have applied for a new loan. This considered a difficult investigation – one that could reduce your credit score.
But not all questions will hurt your credit score – it all depends on the type of questions they are! For example, if you check your credit report or credit history. This considered a soft inquiry, and soft questions do not affect your credit rating.
Serious questions can stay on your credit report for up to three years but account for only 10 percent of your total credit results.
He is a victim of Fraud
One of the most important reasons to check your credit report is to make sure you are not a victim of fraud. Incorrect information in your credit report or fraud will affect your credit score, so checking your credit report and your debt is a financial security option that everyone should take and is part of your overall financial life.
Errors occur and sometimes information incorrectly reported to credit bureaus in respect of unpaid payments. But there is a risk of identity theft where people will use your information to apply for a loan.
Simply put, your good credit rating is an attraction for thieves. If a criminal steals your personal information, they can open new credit cards or apply for new loans, while paying nothing to them, leading to more criminal debt. The result? Bad credit rating and credit rating.
Filed for bankruptcy
As you can imagine, a major financial event, such as bankruptcy, can have a profound effect on your credit score. That is why liquidation considered a last resort. And should only considered by borrowers who do not have the means to pay off their debts.
Many people wonder how much their credit score affected when they successfully file for bankruptcy. Deportation from Canada can stay on your credit report for up to 6 to 7 years, depending on the credit reporting agency. And if you apply for a second term, it can stay in your credit report for up to 14 years.
How To Raise Your Credit Score If It Drops Down
Rebuilding your credit and increasing your credit score is very important. Especially if your future goals include major purchases, such as a home or car, renting a new apartment or condo, or applying for a business loan. Your strategy for restoring your debt and increasing your score will depend on how well you get the lowest credit score in the first place.
How time it take to improve your credit score? With something like bankruptcy (a court case), there is little you can do but wait for the details to fall into your credit report. Which can take at least six years.
However, making sure your future credit payments made on time can be a quick success. Help you start improving your credit score, especially if you are still building your credit history.
If the reason for the drop is due to false or fraudulent information, reporting the matter to Equifax or TransUnion immediately is important. You should also report immediately to the Canadian Anti-Fraud Center.
While you may be able to cope with the decline in credit score in some cases, prevention is a very effective strategy for maintaining a good credit score. That means paying your credit cards and other bills on time every month; not applying for multiple credit cards or loans in the short term; watch your credit rating and make sure it doesn’t exceed 30 percent; and, of course, avoiding collapse.