Why Did My Credit Score Drop 40 Points

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Maintaining a good credit score is important for every consumer as your credit score influences the type of credit products with lower interest rates a consumer will have access to during their lifetime.

Noticing a 40 point drop on your credit score can be discouraging due to the impact it can have on your financial options. Here we set out the most common reasons why a 40 point drop could occur and what can be done about it.

6 Common Reasons A Credit Score Can Drop 50 points

You Have Late Or Missing Payments

Consumer payment history influences up to 35% of your credit score. A single late payment listed will have a negative impact on a credit score. The severity will increase the more payments are missed, or left outstanding. Transgressions of this nature can quickly result in point deductions exceeding 40 points.

Your Credit Utilization Has Increased

If a consumer uses the maximum credit facility available within a short time frame a drop in credit score can be anticipated. This indicates a consumer is easily overextended and not financially positioned to accept more debt, leading to a potential drop in your credit score.

One Of Your Credit Limits Decreased

If a credit limit is decreased it may inadvertently raise your credit utilization ratio and will have a similar impact as maxing out a credit card.

You Closed A Credit Card

Closing credit accounts will increase your credit utilization ratio as you remove access to credit. It will additionally impact the length of your credit history further amplifying the negative impact on your credit score.  

Inaccurate Information Is Reported On Your Credit Report

Mistakes aren’t uncommon on credit reports. If information is incorrectly reported on your credit report it may lead to severe penalties against your credit score. This is why reviewing your credit report regularly is important to avoid unnecessary decreases in your credit score.

Experienced A Major Event Like Foreclosure, Bankruptcy, or Identity Theft

Events such as foreclosure and bankruptcy will significantly drop your credit score due to the nature of these events, it may even prevent future lending. Identity theft although generally not the consumers fault can lead to any of the violations above ensuring a drop in a consumer's credit score.

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What Should I Do If My Credit Score Dropped By 40 Points?

The only way to resolve an issue is to identify the cause of it. Consumers will have to review their credit reports and identify the reason for the negative impact before anything can be done to resolve it.

Once the issue is identified, consumers can dispute the errors in an attempt to recover their credit scores. Alternatively, consumers may consult credit repair specialists like Credit Sage to help repair the damage on their credit reports and potentially raise the consumer's credit score to new heights.

Bottom Line

There are various reasons credit scores can be impacted negatively with 40 or more points. Consumers must review credit reports regularly to reduce the likelihood of this occurring.

Consulting credit repair specialists like Credit Sage is advised to help repair any damage and ensure your best possible credit score is reflected.

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