Why Did My Credit Score Drop?

Explore 9 reasons why your credit score could drop—and what you can do to help fix it


If your credit score has dropped, don’t panic. Small changes in your score—up or down—are normal. That’s because the information in your credit report is updated regularly. And these updates can impact your score.

You should be aware that there’s no such thing as one definitive credit score because there are multiple credit scoring companies that use different scoring models. Your credit scores might be different depending on which credit scoring company calculated them and which scoring model was used. But if you’re seeing a big drop in your credit score, there could be other reasons for that.

Reasons Why Credit Scores Drop

Credit scores are generally calculated using information from your credit report about your finances. Factors like your payment history, the amounts you currently owe, your credit utilization and how many accounts you have open can be important parts of your credit score. So when there’s a drop in your score, it’s likely that there’s been a change in one of these or one of the many other factors that go into credit scores.

There are many possible reasons your credit score might drop. Read on for some of the reasons and what you can do about them.

1. New Credit Applications

New credit applications—like for credit cards—could have an impact on your credit scores. That’s because a new credit application generally creates a hard inquiry, which can cause your credit scores to drop by a few points and stay on your credit report for up to two years. And multiple credit applications in a short period of time could be seen as a sign your financial situation has changed negatively—and they might cause your credit scores to drop.

What you can do: Try to keep new credit applications to a minimum by only applying for the credit you need. And when you do apply for a new credit card, you could first check with the lender to see if they can tell you whether you may be pre-qualified or pre-approved for one of their cards. For example, Capital One’s pre-approval tool uses what’s known as a soft inquiry to check your credit, which won’t hurt your score. Keep in mind that pre-qualification or pre-approval doesn’t guarantee you’ll be approved for a card.

2. High Credit Utilization

Credit utilization is a measure of how much of your available credit you’re using. It’s sometimes called a credit utilization ratio, but it’s often expressed as a percentage. The more of your available credit you use, the more likely it is to negatively affect your credit score. 

What you can do: Experts recommend keeping your credit utilization at 30% or less to help you maintain a good credit score and show lenders you’re responsible with credit. 

3. Payment History

Your payment history is an important part of your credit scores. Just one late or missed payment can have a negative impact on them.

The timing is an important factor to keep in mind. If you’re late making a required payment, your credit card issuer may charge a late fee and interest, depending on the issuer and card. And after 30 days past the due date, the issuer may report the delinquency to the credit bureaus, which could have a negative impact on your credit scores. 

What you can do: Consistently paying bills on time may help you improve your credit report’s payment history. If that feels easier said than done, you could consider setting up automatic payments or reminders. 

4. Derogatory Remarks on Your Credit Report

Late payments, bankruptcies and foreclosures are known as derogatory remarks, or derogatory marks. If this negative information is listed on your credit reports, it can hurt your score. Late payments and foreclosures could generally stay on your credit report for up to seven years, while bankruptcies, depending on the type, could generally stay on your credit report for up to 10 years. However, the negative impact to your credit generally diminishes over time.

What you can do: First, you could make sure the information in your credit report is accurate. You should dispute any errors with the credit bureau that provided your report and alert them and your card issuer of suspected fraud. But if the negative information is accurate, time and responsible credit use can help you improve your score. 

Credit counseling organizations can also work with you and offer personalized recommendations to improve your credit. 

Other Reasons Why Credit Scores Drop

You might have been familiar with the reasons above, but what else could impact your credit score? You may not realize that closing a credit card, an authorized user using your card, co-signing a loan, a mistake on your credit report or being a victim of identity theft could also affect your score. Read on for more about these.

5. A Closed Credit Card

It may be tempting to close a credit card you don’t use, but keep in mind, it may impact your credit. Once the account closes, the average age of your credit accounts could change, depending on how long you’ve had the account. Because your credit score is based partly on the length of your credit history, a shorter history can lower your credit scores.

Your credit utilization rate may also increase, which can affect your credit scores.  

What you can do: Continue using credit responsibly by making on-time payments on your other accounts and keeping your credit utilization low. You may also want to review your credit reports to make sure there are no errors.

6. An Authorized User Is Using Your Credit Card

If you’ve added an authorized user to your credit card account, they’ll typically get a credit card linked to your account and can use it to make charges, but they’re not responsible for paying the balance. Any charges the authorized user makes can increase your credit utilization, which can lower your credit scores. 

What you can do: Before adding an authorized user to your account, you might want to talk with them about responsible credit card use. Setting a spending limit with authorized users could help you avoid mistakes that could affect both your and the authorized user’s scores.

7. Co-signing a Loan

When you co-sign a loan, you agree to make payments if the borrower is unable to. The loan and payment history can appear on your credit reports as well as the borrower’s. If there’s a hard inquiry when you co-sign the loan, it could affect your credit score. Any missed payments or misuse of the credit account can have the same effect. 

What you can do: Before co-signing a loan, make sure you have room in your budget for the monthly payments in case the borrower is unable to cover them. It’s also a good idea to establish expectations with the borrower and ask for access to the account so you can track payments. But if you don’t have money to make the loan payments or you need to apply for credit in the near future, you might also choose not to co-sign the loan.

8. A Mistake on Your Credit Report

You might notice mistakes in your credit reports. That’s why the Consumer Financial Protection Bureau (CFPB) recommends reviewing your credit reports at least once a year to make sure they’re accurate. Any mistakes about 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. You may also want to consider CreditWise from Capital One. With CreditWise, you can access your free TransUnion® credit reports and weekly VantageScore® 3.0 credit score anytime, without hurting your score. And it’s free to everyone, not just Capital One cardholders.

If you see something you believe is an error in your credit reports, you might want to dispute the information.

9. Identity Theft

Identity theft may impact your credit scores in a few different ways. For instance, a thief could open a new line of credit under your name, use the line of credit and fail to pay the bills. The credit utilization on the account could climb, and the payment history in your credit report could be affected. Because the information is listed under your name, your credit scores could drop. 

What you can do: Check your credit reports regularly and look for signs of potential identity theft. Report any fraudulent charges to your credit card issuer, and alert the credit bureaus.

Rebuilding Your Credit

Your credit score relies on many factors. And as the Federal Trade Commission explains, using credit responsibly over time by doing things like paying your bills on time, paying down outstanding balances and staying away from new debt can often help you improve your score.

So, if your credit score has taken a hit, don’t despair. It can take time, but it’s possible to get your score back to where it was—or even better.


Learn more about Capital One’s response to COVID-19 and resources available to customers. For information about COVID-19, head over to the Centers for Disease Control and Prevention

Government and private relief efforts vary by location and may have changed since this article was published. Consult a financial adviser or the relevant government agencies and private lenders for the most current information.

We hope you found this helpful. Our content is not intended to provide legal, investment or financial advice or to indicate that a particular Capital One product or service is available or right for you. For specific advice about your unique circumstances, consider talking with a qualified professional.

Capital One does not provide, endorse or guarantee any third-party product, service, information, or recommendation listed above. The third parties listed are solely responsible for their products and services, and all trademarks listed are the property of their respective owners.

The information contained herein is shared for educational purposes only, and it does not provide a comprehensive list of all financial operations considerations or best practices.

Your CreditWise score is calculated using the TransUnion® VantageScore® 3.0 model, which is one of many credit scoring models. It may not be the same model your lender uses, but it can be one accurate measure of your credit health. The availability of the CreditWise tool depends on our ability to obtain your credit history from TransUnion. Some monitoring and alerts may not be available to you if the information you enter at enrollment does not match the information in your credit file at (or you do not have a file at) one or more consumer reporting agencies.

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