Why Did My Credit Score Go Down When Nothing Changed?

If you live in the United States, then you probably know how important it is to maintain a good credit score. But can your credit score go down even if nothing has changed? We will discuss the answer to this question in much detail below.

Why Did My Credit Score Go Down When Nothing Changed?

Your credit score can go down when it appears that nothing changed for a variety of reasons. A small change in your credit score of 3 to 20 points is normal, however, a larger change of 30+ points is indicative of an underlying problem. Your credit report is constantly being updated with new information from the banks and lenders that you have accounts with. Sometimes small changes that are not noticed by you can cause your credit score to go down. One of the most common reasons that your credit score goes down even though nothing appears to have changed is an increase in your credit utilization. For example, if you made a large purchase on one of your credit cards and did not pay it off, a large balance could cause your score to go down.

That said, we will now discuss all of the reasons as to why your credit score may have gone down even though you believe that nothing has changed.

Missed Payment

Missing a payment on a credit card or loan can cause your credit score to down even though nothing else has changed. Your payment history accounts for 35% of your credit score, so missing a payment can cause a significant drop in your credit score. To determine whether a missed payment is causing a drop in your score, you should request a copy of your credit report and check each account for missed payments.

Credit Utilization

Even though nothing has changed on your credit report, your credit score may have gone down because you increased the use of your credit cards. If the balance on your credit cards increases, this could cause your credit score to go down. As a rule of thumb, you should not use more than 30% of your available credit. For example, if you have a credit limit of $10,000, you should not leave a balance on your credit card that exceeds $3,000. Leaving a balance of more than 30% of your available credit will lower cause your credit score to go down even though nothing else has changed.

Closing an Account

Closing an account that you’ve had for a long period of time can cause your credit score to go down when nothing else has changed. Closing down an old account can lower your credit score for three main reasons. The first reason is that closing down an old account reduces the mix of credit that you have. The credit reporting bureaus reward persons who have several diverse accounts, closing down your credit card reduces the credit mix that you have, causing your score to go down.

The second reason that closing an account can cause your credit score to go down is because it reduces the amount of available credit that you have, increasing your credit utilization. The third reason is that it reduces the average age of all of your account. So, if you have an old account, although it may be tempting to close it down, you should be aware that it could cause your credit score to go down for the reasons we just mentioned.

Lowered Credit Limit

If your bank or creditor lowers a credit limit that you have on one of your credit cards, this may cause a drop in your credit score. This is so because a lower credit limit increases your credit utilization, which can potentially lower your credit score. So, login into your accounts and check to see if one of your credit limits was lowered. This could explain the unexpected drop in your credit score.

Applying for New Accounts

Applying for credit cards or loans can cause your credit score to go down. This is so because every time you apply for a credit card or loan, a hard inquiry is placed on your credit report. A single hard inquiry can cause your credit score to go down by 5 to 10 points. While a single hard inquiry will not cause your credit score to go down by much, several hard inquiries can cause a significant decrease in your credit score. So, if you applied for a new credit card or loan, even if you weren’t approved for them, your credit score may have slightly gone down because applying alone will cause a hard inquiry to appear on your credit score, bringing it down.

A Derogatory Mark Was Added to Your Credit Report

Although we all know that making payments on our credit cards and loans is essential for a good credit score. Oftentimes we forget to make a payment on other bills, such as utility bills and medical bills. Failing to make a payment on such bills could cause significant damage to your credit. If you fail to make a timely bill payment, your account can be sent to a debt collection agency to collect the money that you owe. Collection agencies will then add a collection account to your credit report. Collection accounts can cause significant damage to your credit score. So, if you have noticed a drop in your credit score it could be that a derogatory mark has been added to your credit report.

Bottom Line

If you have ever checked your credit score and noticed that your credit score went down even though you believe nothing has changed, don’t panic as it’s normal for your credit score to fluctuate from time to time. If you have noticed a slight drop, such as 10 to 15 points, this is totally normal and is not indicative of a significant problem. However, if your credit score drops more than 30 points, this is cause for concern and you should review your credit report to see what’s causing such a large drop in points. The culprit may be increased credit utilization, closure of an account with a good history, or the addition of a derogatory mark on your credit report.

How Can You Improve Your Credit Score?

You can improve your credit score by performing the following actions:

  • Pay all of your credit cards and loans on time
  • Pay all of your other bills on time
  • Don’t apply for too many credit cards or loan within a short period of time
  • Keep old accounts open
  • Reduce the balances on your credit cards and loans
  • Check your credit report & dispute any inaccuracies that you find

Benefits of Having a Good Credit Score

There are many benefits to having a good credit score, here are some of those benefits:

  • Better approval odds for credit cards and loans
  • Better interest rates and loans terms
  • Renting the apartment that you want
  • Financing or leasing the car that you want
  • Better auto insurance rates
  • Approval for higher credit limits

Credit Score Planet Frequently Asked Questions

1) Why did my credit score go down when nothing changed?

Although at first glance it may appear that nothing changed on your credit report, small things, such as increase in your credit utilization or new credit card application could cause a drop in your credit score.

2) Why did my credit score drop 100 points?

If your credit score dropped by 100 points, something significant must have changed on your credit report. A credit score of 100 may be caused by things, such as a missed payment or derogatory item being placed on your credit report, such as a collection account, repossession, foreclosure, or bankruptcy.

3) Why did my credit score drop 7 points?

A small drop of 7 points is insignificant and is not indicative of a serious problem with your credit score. Perhaps the credit utilization on one of your credit cards increased or you applied for a credit card or loan. These are some of the most common reasons for a small change such as 7 points.

4) Why is my credit score going down even though I pay on time?

Your credit score can go down for a variety of reasons even though you’re making all of your payments on time. Here are some things that can cause your credit score to go down even though you’re making all of your payments on time: increased in credit usage, application for a credit card or loan, closure of an account, or a derogatory item being added to your credit report.