5 Ways Your Credit Score Can Drop And What To Do About It!

June 22, 2021 | Daniel Dewitt

ways credit score can drop

 

Have you ever wondered about the different ways your credit score can drop? There are actually a wide variety of factors that play into your credit score.

These are just some of the ways your credit can drop. From applying for a lot of credit cards and loans in a short span of time, getting behind on your loan payments, defaulting on a loan, canceling your credit card, or using your credit card excessively, any of these can really hurt.

It is important you know how each of these ways your credit score can drop. Then you should know how something like online title loans can help when you’re in a pinch.

5 Ways Your Credit Score Can Drop

1. Applying For A Lot Of Credit Cards And Loans Too Quickly

Each time you apply for a credit card or loan, the credit card company or lender will do what’s called a “hard pull,” which causes a short, temporary dip in your score. So, while you don’t really need to be concerned about opening a new line – or two – of credit, be cautious about opening up more than that around the same time.

2. Getting Behind On Your Loan Payments

If you can’t keep up with your credit card or loan payments, you risk seeing your credit score drop. While your lender may forgive one or two late payments – that means more than 30 days overdue – if you’re missing payments in a row then you are almost certain to see your score drop.

3. Defaulting On A Loan

What’s the difference between defaulting on a loan versus delinquency? The latter is at least 30 days late, while the former is a period of more than 90 days typically.

Defaulting on a loan will cause one of the most serious penalties to your credit score, so these are to be avoided if at all possible. It is definitely one of the terrible ways your credit score can drop. You can reach out to your lender ahead of time in case they can help you work something out.

4. Canceling Your Credit Card

It sounds crazy but canceling credit cards is one of the big ways your credit score can drop. Avoid canceling your cards if possible, because you’ll have lower credit utilization as well as the probable need to decrease spending on your other card or cards. Another factor involves your average credit history with a given lender, so try to avoid canceling newer cards in particular.

5. Using Your Credit Card Excessively

An important aspect of your credit score involves your credit utilization. Specifically, the ratio of how much you are borrowing versus your spending limit on a given line. It is also one of the ways your credit score can drop significantly.

If you use more than one-third or one-half of your credit limit, you’re at risk of losing some points on your credit score because your lender may worry about an overreliance on that line of credit. You also want to avoid big-ticket purchases on your credit cards for this same reason.

 

online title loan credit drop

 

Other Credit Score Factors To Keep In Mind

While these are five of the major ways your credit score can drop, be aware that other factors exist. Among them are:

  • Not checking your credit report - If you don’t consistently look over your credit report, you could be missing out on suspicious activity conducted in your name. As a victim of identity theft, your credit score could take a serious nosedive. If you note anything suspicious, you’ll want to reach out to the credit agency.
  • Not using a new credit card - It can be tempting to get a new credit card to take advantage of some benefits like airline miles, for example. Or maybe you think more accounts will help your score. If you don’t use that new card, however, there won’t be enough spending information and your overall credit history length will be shortened as well.
  • Your credit limit was lowered - Let’s say you spend the same amount of money on your credit card as usual. Your credit limit, however, has been lowered on that card. This means your total credit utilization will increase, which is a common factor for a lowered credit score.
  • Your bankruptcy comes off of your credit report - Once a bankruptcy comes off of your credit report, after seven or ten years depending on the bankruptcy, you’ll probably move over to a different credit scorecard. This could result in a drop because your credit is now compared with people who have not had to file for bankruptcy.

Use Online Title Loans For Help

It’s important to pay off your credit cards and loans so that your credit stays in great shape. Sometimes, however, you will face an emergency that doesn’t let you stay up on your card or loan payments.

With an online title loan from Carolina Title Loans, Inc., you can get the cash you need quickly and easily. An online title loan uses your vehicle’s title as collateral for the lump sum of cash – which can be anything up to $15,000.

Whatever the reason, whether medical bills, home repairs, or even late utility bills, an online title loan can help out. You can qualify for this loan even if you are experiencing a credit drop – we don’t even report to credit bureaus if you default on your loan payments. And the process is simple and convenient for anyone to go through.

It starts with you filling out the online form on our website. This form allows the nearest online title loan location to contact you and set up a meeting. The meeting can happen either at a location of your choosing or at one of our South Carolina stores.

Whether the meeting is at the store or another location, have your vehicle, lien-free title, and your driver’s license or state-issued ID for the loan rep to assess. They will inspect your vehicle to help determine how much you could qualify for. They will then determine if you qualify for approval. If you do, they will help you finish the paperwork.

Once the paperwork is finished, you will either get the money on the same day or the next bank business day at the latest.

Avoid A Credit Drop And Get An Online Title Loan Today

Keep your credit intact by remembering the ways your credit score can drop. It is important to consistently work on improving your credit score. And if an emergency pops up and stops your progress, turn to an online title loan from South Carolina Title Loans, Inc. for help. Fill out the online form today to get started.