Why Did My Credit Score Drop 50 Points? (2024)

FAQs

Why did my credit score drop 50 points for no reason? ›

Heavy credit card use, a missed payment or a flurry of credit applications could account for a credit score drop. Amanda Barroso is a personal finance writer who joined NerdWallet in 2021, covering credit scoring. She has also written data studies and contributed to NerdWallet's "Smart Money" podcast.

It's possible that you could see your credit scores drop after fulfilling your payment obligations on a loan or credit card debt. Paying off debt might lower your credit scores if removing the debt affects certain factors like your credit mix, the length of your credit history or your credit utilization ratio.

Lenders report credit information to the credit bureaus at different times, often resulting in one agency having more up-to-date information than another. The credit bureaus may record, display or store the same information in different ways.

The most likely reasons are: your balances increased, you recently closed accounts, you applied for new lines of credit, or there is inaccurate or fraudulent information on your account. If your credit score dropped by 40 points, this is likely due to late payments that continue to compound on past-due bills.

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 2022, the average FICO^® Score^☉ in the U.S. reached 714.

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.

As someone with a 650 credit score, you are firmly in the “fair” territory of credit. You can usually qualify for financial products like a mortgage or car loan, but you will likely pay higher interest rates than someone with a better credit score. The "good" credit range starts at 690.

Scoring Models: Both agencies use slightly different scoring models to calculate credit scores. This means that the same credit activity can have different impacts on the scores calculated by each agency. They each also consider certain factors more heavily than others when calculating scores.

How do I raise my FICO score? ›

Keep balances low on credit cards and other revolving credit: high outstanding debt can negatively affect a credit score. Pay off debt rather than moving it around: the most effective way to improve your credit scores in this area is by paying down your revolving (credit card) debt.

If you can improve your credit utilization ratio (by paying off debt or increasing your credit limit), you might see a decent score boost fairly quickly. Improve your credit score over the long term by focusing on making payments on time, keeping accounts open, and applying for new credit sparingly.

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.

Your credit score may have dropped by 46 points because a late payment was listed on your credit report or you became further delinquent on past-due bills. It's also possible that your credit score fell because your credit card balances increased, causing your credit utilization to rise.

A 750 credit score is Very Good, but it can be even better. If you can elevate your score into the Exceptional range (800-850), you could become eligible for the very best lending terms, including the lowest interest rates and fees, and the most enticing credit-card rewards programs.

Any mistakes in your accounts, such as incorrect balances or payment information, may cause your credit scores to drop. What you can do: You can check your credit reports for free at AnnualCreditReport.com or by calling 877-322-8228.

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.

In other words, taking on a mortgage loan can temporarily lower your credit score until you prove to your lender that you're capable of paying it back. This involves making consistent, timely mortgage payments and not taking on too much additional debt in the meantime.

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.