why has my credit score gone down

February 2024

Why Has My Credit Score Gone Down In February 2024

This article will investigate the answer to the question, “Why has my credit score decreased?” 

We will provide an in-depth analysis of the factors that can influence your credit score, including a review of your various credit accounts and recommendations for improving them.

Topics that you will find covered on this page

You can listen to an audio recording of this page below.

Overview of Credit Score

A credit score is a numeric expression of your creditworthiness based on the information in your credit report.

In the United Kingdom, credit reference agencies such as Experian, Equifax, and TransUnion generate credit scores to assist lenders in determining a borrower’s likelihood of repaying debts. 

A borrower with a higher credit score is more dependable, whereas a borrower with a lower credit score is less dependable.

Factors That Affect Your Credit Score

When determining credit scores, credit reference agencies consider several factors. According to our research, these factors include:

  • Payment history
  • Credit utilisation ratio
  • Length of credit history
  • Types of credit accounts
  • Recent credit applications

Reasons Why Your Credit Score Has Dropped

Late Payments or Missed Payments

The impact of late or missed payments on one’s credit score can be substantial. According to our analysis, this is one of the most critical factors that credit reference agencies consider when calculating your credit score. 

Nonpayment on credit accounts, such as loans, credit cards, and mortgages, can either lower credit risk or indicate a poor credit history and make you a less dependable borrower.

Credit Utilisation Ratio

In addition to lowering your credit score, a high credit utilisation ratio (the proportion of your total credit limit) can affect your credit score. Maintaining a low credit utilisation rate demonstrates responsible borrowing and contributes to preserving a good credit score. 

Lenders favour borrowers with a low credit utilisation rate because it indicates less reliance on credit and reduced risk. Maintaining a low credit utilisation rate demonstrates responsible borrowing and contributes to preserving a good credit score.

Too Many Credit Applications in a Short period

Multiple credit applications submitted within a short period may indicate financial distress to credit reference agencies, resulting in a lower credit score. 

Multiple credit checks by various lenders can hurt your credit score, making it more challenging to obtain new credit.

Closing Accounts and Average Age of Credit

Your credit score can suffer when you close old accounts or have a short credit history. When determining your credit score, credit reference agencies consider the average age of your credit accounts. 

A more extended credit history indicates excellent experience managing credit and is viewed favourably.

Credit Mix

A diverse credit mix, including loans, credit cards, and mortgages, can positively affect your credit score. Lenders favour borrowers with multiple credit accounts, demonstrating their ability to manage various types of credit.

Negative Impact on Your Credit File

Our research indicates that a poor credit history, such as missed payments, County Court Judgments (CCJs), or Individual Voluntary Agreements (IVAs), can hurt your credit score. 

These factors indicate a history of financial hardship and make you a less desirable borrower.

Electoral Register and Financial Associations

Not being registered to vote or having financial relationships with individuals with poor credit can also lower a person’s credit score. Credit reference agencies use the electoral register to verify your identity and address, and failure to register can hurt your credit rating. 

Financial associations, such as joint accounts or shared credit, can hurt your credit score if the other person has a poor credit history.

Victim of Identity Theft

If you have been a victim of identity theft or fraud, your credit score may be negatively affected. Accounts or transactions that are fraudulent can result in missed payments and higher credit utilisation ratios, lowering your credit score. 

Monitoring your credit report regularly can help you identify any signs of identity theft and protect your credit rating.

Want to know what information is held about you on your credit report?

Checkmyfile can show you, in one report, data from the leading 3 agencies in the UK

Get an independent view with your checkmyfile Credit Score
Data from all four Credit Reference Agencies: Equifax, Experian and TransUnion.
Try free for 30 days. Really easy to cancel – by Freephone or even online
Ensure your payments are correctly recorded
Understand what’s affecting your score

Read some recent 5 star client testimonials, on Trustpilot, about Checkmyfile’s comprehensive credit report

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credit score gone down

Credit Limit Changes

A reduction in your overall or individual credit card limits can hurt your credit score. Lower credit limits can result in a higher credit utilisation ratio, which, as stated previously, can lower your credit score. 

Maintaining a stable credit limit and using credit responsibly can prevent a decline in credit scores.

Strategies to Improve Your Credit Score Again

According to our experience, the following methods can assist in boosting your credit score:

Pay Bills on Time and Reliably Borrow Money

Punctual bill payment and responsible borrowing habits will positively affect your credit score. Maintaining an on-time payment history and avoiding late fees can contribute to a good credit score.

Work Towards a Healthy Credit Mix and Utilisation Rate

A diverse credit mix and a low credit utilisation rate can help to improve a person’s credit score. Reduce debt balances and refrain from maxing out credit cards to maintain a low credit utilisation rate. 

This will show credit reports and indicate that you are an accountable borrower to lenders.

Monitor Your Credit Report Regularly for Unexpected Changes in Your Credit File

Checking your credit report frequently enables you to identify any errors or discrepancies that could hurt your credit score. 

You can dispute inaccurate information with the credit reference agency and have it rectified, thereby preventing a negative impact on your credit score.

Contact Creditors or Lenders if You Are Having Trouble Making Payments on Time

Lenders may assist in managing accounts and help you formulate a plan to avoid late or missed payments, which can hurt your credit score

Proactively addressing payment issues demonstrates a commitment to responsible account management.

Register on the Electoral Register

Ensure you are registered to vote at your current address, which can positively affect your credit score. 

Credit reference agencies use the electoral register to verify your identity and address, and being registered can improve your credit rating.

Maintain Long-Standing Credit Accounts

Maintaining old accounts in good standing can contribute to more extended credit history, positively impacting your credit score. 

Avoid closing long-standing accounts, as doing so can hurt your credit score by lowering the average age of your credit accounts.

Limit Credit Applications

Avoid submitting many credit applications quickly, which may indicate financial distress and lower your credit score. Spread out your credit applications and apply for new credit only when necessary.

Understanding the causes of a decline in your credit score is essential for addressing the problem and working to improve it. By following the strategies outlined in this article and monitoring your credit report regularly, you can increase your credit score and become a more reliable borrower in the eyes of lenders. 

By maintaining a healthy credit mix, managing your credit utilisation ratio, and remaining vigilant against identity theft, you can mitigate the factors contributing to a credit score decline and work towards a more prosperous future.

poor credit score

Why did my credit score go down when nothing changed?

A credit score decline can be puzzling when nothing has changed. However, factors such as credit reference agency updates and changes to your overall credit limit can affect your credit score. 

Sometimes, a forgotten account or the closure of an old version can negatively impact your credit history, resulting in a lower credit score. Monitoring your credit report regularly is essential for identifying and addressing any factors that may hurt your credit score.

Why is my credit score decreasing if I pay for everything on time?

Payments made on time substantially impact your credit score, but other factors can still impact and lower your credit score. A high credit utilisation ratio may negatively affect your credit score even if you make timely payments. 

In addition, applying for additional credit within a short period or closing an old account can result in a lower credit score. These factors can be mitigated, and a healthy credit score can be maintained by keeping a diverse credit mix and managing credit usage.

What are three ways your credit score can drop?

Payment history is a significant factor in determining credit scores; missing payments can lower your score.

Utilising a large portion of your available credit can hurt your credit score, signalling to lenders that you pose a greater credit risk.

Multiple credit applications within a short period may result in various credit searches, which can lower your credit score.

Is a 600 a good credit score?

Improving your credit score can increase your likelihood of being approved for better credit offers. A credit score of 600 is regarded as “fair,” although it may not qualify you for the best credit products or interest rates. 

Adopting responsible financial practices can help you improve your credit score.

How do I recover from a credit score drop?

To recover from a drop in credit score:

  • Ensure payments are made on time and avoid late or missed payments.
  • You can reduce your credit utilisation ratio by reducing outstanding balances and managing credit usage.
  • Limit the number of credit applications you make quickly to avoid damaging your credit score.
  • Keep old accounts active to prolong your credit history.
  • Address any inaccuracies in your credit report so that your credit record is accurate.

What raises credit scores?

To see how much credit will improve your credit score, you can:

  • Consistently making on-time payments to demonstrate dependability as a borrower.
  • We manage credit usage by reducing outstanding balances to maintain a low credit utilisation ratio.
  • Establishing a diverse mix of credit accounts to demonstrate responsible credit management requires diversification.
  • We limit credit applications within a brief time to prevent repeated credit checks.
  • Regularly reviewing your credit report and addressing any inaccuracies is necessary to maintain an accurate credit record.

Can a change in my address lower my credit score?

Moving to a new address does not directly impact your credit score, but having the same address in multiple addresses on your credit report may need to be clarified for lenders. 

A stable credit score can be maintained by updating your address on your financial accounts and registering to vote at your new address.

Does settling a debt with a debt collection agency improve my credit score?

The effect of settling a debt with a debt collection agency on your credit score can be positive. The settled debt may still appear on your credit report, but it will be marked as “settled” or “paid,” which is more favourable than an outstanding debt. 

The negative impact of a settled debt and lower credit limit will diminish over time, and your credit score will recover.

How do county court judgments (CCJs) impact my credit score?

The impact of county court judgments (CCJs) on your credit score can be substantial. A CCJ indicates that you have missed a payment and been retaken to county court judgment, making you a less dependable borrower in the eyes of lenders. 

A CCJ will remain on your credit report for six years, but paying it off can help your credit score improve over time.

Why is having a good credit score important in personal finance?

In personal finance, a good credit score is essential because it affects your access to credit, such as loans, mortgages, and credit cards. Lenders evaluate your creditworthiness and the risk associated with lending money based on your credit score. 

A higher credit score increases your likelihood of being approved for credit, obtaining better interest rates, and gaining access to more profitable financial products. Maintaining a good credit score can help you save money and achieve financial objectives.

Want to know what information is held about you on your credit report?

Checkmyfile can show you, in one report, data from the leading 3 agencies in the UK

Get an independent view with your checkmyfile Credit Score
Data from all four Credit Reference Agencies: Equifax, Experian and TransUnion.
Try free for 30 days. Really easy to cancel – by Freephone or even online
Ensure your payments are correctly recorded
Understand what’s affecting your score

Read some recent 5 star client testimonials, on Trustpilot, about Checkmyfile’s comprehensive credit report

Try free for 30 days and get the information that you need, then £14.99 per month. However, you can cancel online at any time. If you sign up, we will receive a small payment for introducing you.  This helps us produce more content for the site.

 

Meet the author

Rob Atherton

Rob Atherton

Rob writes and edits the content produced by the rest of the team. He has a degree in History from Leeds University and has producing, reviewing and editing the site since 2016

Meet The Team

Frequently Asked Questions

How do credit reference agencies calculate credit scores in the UK?

Credit reference agencies in the United Kingdom, including Experian, Equifax, and TransUnion, calculate credit scores by analysing the information in your credit report. 

Each agency has its scoring system, but they all evaluate these factors to determine a borrower’s creditworthiness and propensity to repay debts. 

Payment history, credit utilisation ratio, length of credit history, types of credit accounts, and recent credit applications are considered factors.

How can I ensure my credit report is accurate and up to date?

Reviewing your credit report regularly for any discrepancies or errors is essential to ensure that it is accurate and up-to-date. 

Contact the credit reference agency to initiate a data dispute if you discover any errors, such as incorrect personal information, account information, or payment history. 

They will investigate and correct any inaccuracies, thereby assisting in maintaining an accurate credit history and a fair reflection of your creditworthiness.

What role does the electoral register play in my credit score, and how can I make sure I’m registered?

The electoral register is essential for credit reference agencies to verify your identity and address. Voter registration at your current address can positively affect your credit score. 

To confirm your registration, visit the UK government’s online registration page and provide your personal information, National Insurance number, and current address. 

Maintaining a stable credit score can be accomplished by updating your registration whenever you move.

What steps can I take if I struggle with managing my accounts and maintaining a good credit score?

Consider contacting your lenders to discuss your situation if you’re having trouble managing your accounts and maintaining a good credit score. 

Numerous lenders assist and may collaborate with you to develop a plan to manage and prevent missed payments. 

In addition, you can seek guidance from non-profit organisations, such as Citizens Advice or StepChange, which provide free, impartial advice on personal finances, debt management, and improving your credit score.

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