Have you recently checked your credit score and found it unexpectedly lower than before? Credit scores can be puzzling, leaving many wondering, “Why has my credit score gone down?”

In this blog post, we’ll delve into the common reasons behind credit score fluctuations, empowering you with the knowledge to address potential issues affecting your credit health!

Canstar is only one of the many websites where you can check your credit score for free.

Also, you may obtain a free copy of your credit report every three months by visiting the MoneySmart website of the Australian Government.

Moreover, they will include in your credit report every transaction, including the sums borrowed, spent, and reimbursed.

In addition, it might be able to connect these transactions to adjustments made to your credit score.

Also, keeping track of your transactions and the credit and loans you apply for might be beneficial if you are worried about keeping your credit score high.

Therefore, you may cross-reference this information with your credit report to confirm its accuracy.

Many causes can decrease or increase your credit score! Therefore, you can read our list below to see the main ones!

Consistently missing payments can result in more severe consequences beyond a credit score drop.

Also, financial institutions may increase interest rates on loans or credit cards due to the perceived higher risk.

Additionally, repeated late payments could lead to debt collection agencies getting involved, impacting your credit report further.

Moreover, these missed payments might also trigger penalties or fees, exacerbating the financial strain.

Therefore, it’s essential to address late payments promptly to mitigate their lasting repercussions in your financial health.

Each credit application triggers a hard inquiry. However, this indicates that potential lenders want to learn more about your financial history.

Moreover, credit agencies may get several queries quickly as a sign of financial strain or careless borrowing practices.

Also, your credit score may suffer due to this rush of applications. This happens because it may indicate that you may have more payment defaults.

In addition, it’s crucial to remember that credit scoring algorithms sometimes treat several queries made inside a certain timeframe as a single query.

Therefore, when you’re rate shopping—for example, for a mortgage or auto loan—the impact on your score is minimized.

So, to keep a good credit profile, monitoring and managing credit applications is still essential.

Secured credit involves collateral, like a home or car, reducing the risk for lenders if you miss payments.

Also, this collateral serves as a safety net, often resulting in lower interest rates.

On the other hand, unsecured credit, such as credit cards or personal loans, lacks collateral.

Moreover, this higher risk for lenders may prompt tighter scrutiny during credit evaluations.

In addition, applying for unsecured credit can impact your credit score due to the inquiry made by potential lenders.

Therefore, these inquiries signal the intent to borrow and may temporarily lower your score.

Requesting a credit limit increase can influence your credit score, initially triggering a hard inquiry on your credit report.

Moreover, this inquiry might temporarily lower your score.

Additionally, the increased limit could affect your overall credit utilization ratio.

However, contrary to assumptions, a higher limit might positively impact your score in the long term by lowering your utilization rate if you maintain or decrease your spending.

Your credit report could include inaccuracies from time to time, and you are the best person to identify them.

Also, get in touch with the appropriate credit provider and credit reporting agency if you think there are inaccurate entries on your file so they may check and update the data.

Therefore, the data could be corrected or deleted, depending on the seriousness of the problem.

Were you aware that your score might be affected by the age of the material in your file?

So, a four-year-old credit inquiry, for instance, will affect your score differently from a one-year-old one. You could see some variations in your score as the data ages.

Having a consumer default on your Credit Report can have lasting consequences.

It’s a red flag for lenders, signaling a significant risk in extending credit.

Moreover, defaults can remain on your report for years, impacting your ability to secure loans or credit cards in the future.

Additionally, defaults can lead to debt collection efforts or legal action by creditors to recover the owed amount, adding further stress to your financial situation.

Also, managing and resolving defaults promptly is crucial to minimize their adverse effects on your creditworthiness.

Each credit application triggers a hard inquiry on your credit report, potentially lowering your score temporarily.

Moreover, these inquiries indicate an intent to borrow and can raise concerns about financial strain or a sudden need for credit.

Also, limiting the number of new credit inquiries can help maintain a stable credit score.

So, consider spacing out applications for credit to minimize the impact on your score.

This can happen especially when planning significant financial moves like getting a mortgage or a car loan.

Therefore, being mindful of when and how often you apply for credit can positively influence your overall credit health and stability.

If you are in an individual voluntary arrangement (IVA), have filed for bankruptcy, or have a judgment against you, these situations will have a negative effect on your credit score.

Lenders are less likely to accept your credit application if any of these are on your credit record.

This is because they give the impression that you have previously had financial difficulties.

So, this might make lenders believe that there is a higher chance you won’t be able to repay them.

Regarding older accounts, credit reference agencies usually have more favorable assessments. This is because long-term successful credit account management suggests the possibility of becoming a trustworthy borrower.

Closing long-standing accounts may impact Your credit score because doing so may reduce the average age of your credit accounts.

If you’re still looking for information about your credit score, check out our blog post below about what a good credit score is in the UK!