Have you found you’re suddenly not getting approval for credit applications? Confused as to why your credit score is falling when you thought you were on top of your finances? There are any number of things that could be affecting it. But no need to panic. You can check your Experian Credit Score to see if it’s lower than you thought. If it is, these tips aim to help you find what could be unexpectedly hurting it.
Have you moved recently?
Moving house can be a pain – it’s stressful, exhausting and expensive. But it can also hurt your credit score. If you’ve changed your address but not updated this on the electoral register, this could have a negative impact on your Experian Credit Score. Make sure your details are up to date to avoid any unnecessary drops.
Financial associations
So, you’re doing everything right, but still not getting approved for credit? It might be time to blame someone else. (Doesn’t that feel good?) Due to something called a financial association, another person can negatively impact your chances of being approved for a loan, mortgage or credit card.
Financial associations happen if you’ve applied for a joint mortgage or opened a bank account with someone. It’ll also be the case if you act as someone’s guarantor or receive a joint County Court Judgment. Financial associations appear on your Experian Credit Report, so lenders may take this information into account when assessing your application. You can request to have financial associations removed from your credit report, if you no longer hold active accounts with the other person.
Credit card balances
Paying off your credit cards every month is a good thing. But better still is paying them off and then keeping the balance low.
Repeated credit searches
Simply applying for credit can have a negative effect on your score. If lenders see repeated attempts to secure financing over a short period of time, they may see this as a sign of desperation and decide against extending you credit. Try using eligibility tools to see how likely you are to be accepted for loans, mortgages and credit cards before you apply. These searches will not affect your score.
Experian is a credit broker not a lender†
Closing an old account
This may seem odd. Closing an account that’s been paid off feels like it should be a good thing. However, if that’s your oldest account, shutting it down will reduce the average maturity of your accounts. This can be viewed negatively by lenders.
A forgotten account
Another thing that could be pulling down your score is a long-forgotten account. Is there a card somewhere you no longer use, stuck down the back of the sofa, perhaps? If it’s in arrears, even by a small amount, this could be hurting you. Take a moment to ensure you’re on top of all your accounts.
FAQs
Credit scores can drop due to a variety of reasons, including late or missed payments, changes to your credit utilization rate, a change in your credit mix, closing older accounts (which may shorten your length of credit history overall), or applying for new credit accounts.
Why did my credit score suddenly drop so much? ›
Using more of your credit card balance than usual — even if you pay on time — can reduce your score until a new, lower balance is reported the following month. Closed accounts and lower credit limits can also result in lower scores even if your payment behavior has not changed.
Why has my credit score gone down when nothing has changed? ›
Things like new credit applications and missed payments may impact your credit score. You may be able to improve your credit score in a number of ways, including making sure you're on the electoral register, managing accounts well and limiting new credit applications.
Why is my credit score so low when I have no debt? ›
Various weighted factors mean that even with no credit, your credit score could still be low because the length of your credit history or credit mix, for example, could also be low.
Why did my credit score drop 40 points after paying off debt? ›
If you take out a loan to consolidate debt, you could see a temporary drop because of the hard inquiry for the new loan. Your credit score can take 30 to 60 days to improve after paying off revolving debt. Your score could also drop because of changes to your credit mix and the age of accounts you leave open.
How do I dispute a dropped credit score? ›
To dispute credit report errors, send a letter to the credit bureau that generated the report with the inaccuracy and explain what the error is. The bureau generally has up to 35 days to investigate and respond.
How to raise your credit score 200 points in 30 days? ›
Try paying debts and maintaining your credit utilisation ratio of 30% or below. There are two ways through which you can pay off your debts, which are as follows: Start paying off older accounts from lowest to highest outstanding balances. Start paying off based on the highest to lowest rate of interest.
Why did my credit score go down if I didn't change anything? ›
Credit scores can fluctuate even without significant changes to your credit report. Factors like high credit utilization, closing an account, a new hard inquiry, or errors can lead to a drop in your credit score. High utilization, closing an account, or a new hard inquiry can negatively impact your credit score.
How many points does your credit score go down for an inquiry? ›
How do hard inquiries impact your credit score? A hard credit inquiry could lower your credit score by as much as 10 points, though in many cases, the damage probably won't be that significant. As FICO explains, “For most people, one additional credit inquiry will take less than five points off their FICO Scores.”
Why is my credit score bad when I pay everything on time? ›
A short credit history gives less to base a judgment on about how you manage your credit, and can cause your credit score to be lower. A combination of these and other issues can add up to high credit risk and poor credit scores even when all of your payments have been on time.
Making on-time payments to creditors, keeping your credit utilization low, having a long credit history, maintaining a good mix of credit types, and occasionally applying for new credit lines are the factors that can get you into the 800 credit score club.
What is a decent credit score to buy a car? ›
Your credit score is a major factor in whether you'll be approved for a car loan. Some lenders use specialized credit scores, such as a FICO Auto Score. In general, you'll need at least prime credit, meaning a credit score of 661 or up, to get a loan at a good interest rate.
Why did my credit score randomly drop a lot? ›
Credit scores can drop due to a variety of reasons, including late or missed payments, changes to your credit utilization rate, a change in your credit mix, closing older accounts (which may shorten your length of credit history overall), or applying for new credit accounts.
Why has my credit score decreased without any reason? ›
There are lots of reasons why your credit score could have gone down, including a recent late or missed payment, an application for new credit or a change to your credit limit or usage. The most important information to understand about credit is the factors that go into your scores.
Why is my credit score low if I pay all my bills on time? ›
A short credit history gives less to base a judgment on about how you manage your credit, and can cause your credit score to be lower. A combination of these and other issues can add up to high credit risk and poor credit scores even when all of your payments have been on time.
Why would my credit score drop 100 points in a day? ›
For your credit score to drop 100 points at once, you're most likely talking about being 90 days late or more on a loan or credit card payment you're on the hook for. Believe it or not, a single late payment could cause damage in that ballpark, especially if your credit score is higher to begin with.
How long does it take for a credit score to go up? ›
How soon can you see improvement? The length of time it will take to improve your credit scores depends on your unique financial situation. At the earliest, you may see a change between 30 and 45 days after you have taken steps to positively impact your credit reports.
Is 700 a good credit score? ›
For a score with a range between 300 and 850, a credit score of 700 or above is generally considered good. A score of 800 or above on the same range is considered to be excellent. Most consumers have credit scores that fall between 600 and 750. In 2023, the average FICO® Score☉ in the U.S. reached 715.
