Why Did Your Credit Score Suddenly Drop 200 Points?
So you go about your business when you receive a notification from one of your finance apps. He says, “New credit score available,” and you open the app ready for midday distraction, only to see your score drop 200 points since your last check a month ago.
This was the situation in which one of the editors recently found herself. Did she miss a payment? Did she have a medical bill that she didn’t know about? How could her elaborate score fall so sharply and so quickly?
According to Janet Alvarez, executive editor of Wise Bread , this is a common occurrence that affects many Americans. Although it takes years of attention to score points, one event can knock him off. It’s not fair, but this is how it works.
A slump usually occurs during times of change, such as when you make a major purchase for your new home or open multiple lines of credit. But it could also be a sign of fraud.
“The first step is to identify the cause of the downturn and then directly address it,” says Alvarez. “Depending on the reason, it may take weeks or months for your grade to recover.”
To find out what’s wrong, open one of the free credit reports and look for cases of fraud or error. If you spot anything suspicious, there are a few steps to take :
- Post an extended fraud alert or freeze the security of your credit reports (you will need to do this at all three agencies: TransUnion, Experian, and Equifax) online.
- Report the fraud to the FTC and local police (or the police where the fraud occurred).
- Check with your lending institutions and banks (you can request new cards and PINs for your various assets and stop checks)
- Contact companies listed on your credit report that you do not know and check the information they have on the claimed items. Provide them with a copy of your police report, FTC report, etc.
- Keep a log of everyone you spoke to and record conversations
If your account drops and it is not a scam, it is likely because:
- You haven’t paid your bill on time
- You have offensive marks on your credit report, such as bankruptcy, bills sent for collection, or missed alimony or child support payments
- You have applied for multiple credit cards in a short amount of time
- You have a high utilization rate
- You closed your account (less effect)
“The easiest way to negatively affect your credit rating is to not pay your bill on time,” says Jill Gonzalez, an analyst at Wallethub . “And yes, even after the first late payment, there is little good faith, especially in a year like this, when lending tightens as defaults rise.”
Unfortunately, according to Gonzalez, if you are late or miss a payment, you have little to no choice but to slowly build up your account.
“A consumer can“ fight ”a sharp drop in his credit rating only if offensive signs were added through no fault of his own, that is, if there are inaccuracies in his credit report, which are often found in about 25 percent of cases. , or fraudulent bills and fees, ”she says. “In this case, they can contact the credit bureaus and challenge these inaccuracies.”
Otherwise, it will depend on why your account dropped. If your download is too high (you should aim for 30%), you can pay off some of your debt. According to VantageScore Solutions, it usually takes about three months to recover from opening a new card, closing an account, or maximizing card usage. If you missed a payment, you need to make sure you paid it on time – it can take a year or more to compensate for one missed or unfulfilled payment.
So, is it worth it to panic? Not, according to Alvarez, unless you want to buy a house or car, or if you are applying for a job and they check your grade.
“Your credit rating is a reflection of good financial behavior over time, not just a snapshot of how you do business today,” says Alvarez. Unless, of course, you miss a single payment on the invoice. In this case, it will take you 12 months to recover.