Your credit score can affect not only whether or not you qualify for loans, but how much you will pay for them as well. If you have poor credit, you will end up paying more for the same amount borrowed than someone with good credit. A poor credit score can even cost you getting the job you want in some industries.

Have you been asking yourself recently, “Why did my credit score drop?” There are many factors that affect your credit score, some of which impact your score more than others. Here are some of the major reasons a credit score would fall.

You’re Using Too Much Of Your Credit

How you use your available credit has a huge impact on your score. Using too much of your credit can lower your score. Ideally, you want to keep your overall credit usage at under 30%. Once you start to use more than that, your credit will start to slip. High credit usage signals to lenders that you may be a less than ideal borrower and may have trouble with your finances.

You’re Using Too Little Credit

Paying off your debts is a good thing, but using 0% of your revolving credit may cause your credit score to drop a bit. Lenders make money off of interest payments. If you appear to be reluctant to carry debt, creditors won’t be making much money when lending to you. Keeping your score under 10% will give you the optimal score.

Missed Payments

Missing even one payment can have a devastating effect on your credit score. If you are struggling to make payments, contact your credit card company to see if they will work with you. Just make sure you never skip or make a late payment.

Bad Marks On Your Credit

Foreclosures, bankruptcies, or any liens or judgments against you might end up on your credit score. These are huge red flags for lenders as it shows you don’t have a good grasp on your finances. Always monitor your credit report for derogatory remarks that were made by mistake or through fraud. You can dispute those negative marks and get them removed from your credit.

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You Closed A Credit Account

This counts especially if it was an older account. Length of credit holds a lot of weight when it comes to your credit score. When you close an old account, you have decreased your average length of credit. Creditors like to see a long and stable history of paying your bills, so removing an older account erases that history.

Paying Off Car or Student Loans

While this seems like this should have the total opposite effect, paying off a large debt like a car or student loan will lower your score. Lenders like to see two kinds of debt, long term and secured. A car loan is secured debt because the car is collateral to back the loan itself, and student loan debt is often long term debt that establishes a long credit history.

You’ve Applied For New Credit

Whether you were trying to open up a new card or applying for a loan, opening up too many lines of credit in a short period of time sends a red flag to lenders. It also lowers your average length of credit. Store credit cards can be great to establish credit, but can be damaging when you take on too many at once. It is appealing to save the 20% or whatever deal is being offered when signing up for a new credit card, but resist the urge to take advantage of those offers.

Your credit score is an essential part of your financial life. Keeping good credit will help you get lower rates on loans and save you money, whereas poor credit will end up costing you more over time. Make sure you know what factors affect your score so you can avoid asking yourself “Why did my credit score drop?”