Everything financial seems to depend on your credit score. If you’ve been observing your credit score closely and detected that it abruptly took a drop, it could be due to numerous factors. You should realize what is causing your credit score to change and what you can do to prevent it.
Here are seven probable reasons behind the dropping of your credit score:
- Late or Missed Payments
Late or missed payments are a huge determining factor in terms of a lowered credit score. Some companies may forgive one or two late payments and not report them. Others will report every single time.
- An Unexpected Increase in Credit Usage
An unexpected increase in credit usage can indicate trouble under certain circumstances. Try to avoid overextending yourself by charging too much on your credit cards.
Missing too many payments will throw an account into arrears. It is also referred to as default and can have a devastating impact on your credit score.
- New Lines of Credit
Opening up several lines of credit in a short amount of time can mean you are overextending yourself financially. Limit the number of credit lines you have open at one time.
- Closing Old Accounts
If you close an old account, it will lower the amount of credit you can have. It can also alter the age of your credit history.
- Settling a Debt in Court
If you end up in court, there is a history of default or dispute. Settling a debt in court means the company had to pursue you to collect. Try negotiating outside of the courtroom.
- Moving Frequently
Frequent relocation is a universal sign of instability. Creditors want to know you are financially secure. Part of that is living at the same address for a length of time.
Your credit score will fluctuate over time. Know what causes those changes and work to repair your credit score to get offers for favorable interest rates that will save you money in the long run.
Related Article: 6 Factors That Have No Impact On Your Credit Score
While a good credit score is a significant factor in receiving any financial assistance, a lot of lenders are ready to offer loans to individuals with bad credit. At CashOne, we provide bad credit loans easily to our clients through our vast lender network.