iQuanti: You already know that late or missed payments can hurt your credit. You might even know that applying for too much credit can do the same, so you take care to avoid looking for new credit cards too often.
Despite your best efforts to raise your credit score, however, surprises happen. Fortunately, there are ways to recover from those surprises and clean your credit score up.
With that in mind, here are four reasons your credit may have decreased unexpectedly and how to fix them.
1. Errors
Sometimes, you didn't do anything wrong — but the lender or credit bureau may have.
For instance, they might have somehow mixed you up with someone else of a similar name and put a delinquent account on your credit report.
Another example might be that they forgot to take a delinquent account off your report after they should have done so.
Regardless, you can file disputes with credit bureaus to have these errors removed, restoring your score to the proper amount, as long as you regularly check your credit score.
2. Account Closures
Having more accounts and a more diverse credit mix helps your score. Thus, when an account closes, your score may take a slight hit.
This often happens when you finish paying off a loan. Your lender closes the account, reducing the number of accounts and credit mix on your report.
Card companies may also close credit card accounts after long periods of inactivity (which you can avoid by making occasional purchases).
Lastly, you might just close an account yourself.
Regardless, these won't hurt your score too bad, unless you have only a few forms of credit open.
3. Large Purchases
Credit utilization plays a big part in your score. Credit bureaus calculate your credit utilization ratio by dividing your total balances across all credit cards and lines by your total limits across these.
They also calculate utilization ratios for each individual credit source.
A large purchase or significant amount of spending in a short time can increase your balance a lot, pushing up your utilization ratio. This decreases your score.
Simply pay off the balance and keep your utilization ratios low as often as possible to recover from this.
4. Identity Theft
Identity theft is frightening to think about, but it can happen — and it can harm your score dramatically. A thief may open accounts in your name and rack up large, unpaid balances.
However, you can recover from this.
Credit card companies, credit monitoring services, and other types of firms often have identity theft protections such as fraud alerts. You could also sign up for dedicated identity theft protection services.
Besides that, you can freeze your accounts and your credit score if you see suspicious activity. You may also want to file a fraud report with the FTC and dispute the inquiries and purchases.
Keep an Eye on Your Score
A lot of people get hit with credit score surprises every so often. The important thing is to keep an eye on your credit score, monitor your credit card statements, and take note of anything odd or suspicious.
By staying vigilant, you can keep your score healthy and recover fast from any surprises.
Press Release Service by Newswire.com
Original Source: 4 Reasons Your Credit Score May Have Decreased Unexpectedly
