Why Did My Credit Score Drop 7 Points? (2022)

Maintaining a good credit score is important for every consumer. Your credit score influences whether you get credit lines with lower interest rates, or even get approved at all!

Credit scores can fluctuate by 5-10 points every month and might not be as bad as you think. Below we break down the most common reasons for credit score fluctuations and how you can take back control.

5 Reasons Your Credit Score Can Drop By Points

Credit scores that drop by 7, or less points will generally be caused by monthly fluctuation when new data is added and recalculated. The following areas are typical culprits when trying to identify causes of minor fluctuations. Below we analyze the most common reasons for these point drops.

Hard Inquiries

Whenever consumers apply for a line of credit like a credit card, mortgage, or an auto loan the potential lender is likely to conduct a hard inquiry. These will negatively impact your credit score as it indicates an intention to take on more credit obligations. When a lender pulls your credit report to validate your application, this is a “hard inquiry”.

You Debt-To-Credit Ratio Has Increased

The Debt-to-credit ratio is used to identify how much available credit a consumer has made use of. Avoid using more than 30% of your available credit limit if you want to impress potential lenders. If a credit limit is decreased it may inadvertently raise your credit utilization ratio and will have a similar impact on your debt-to-credit ratio.

Revolving Credit Changed

If interest rates are increased and your debt might also increase, which will be reflected on your credit report.

Public Records

Any legal documents that are recorded by the government will be available to the public and used by credit reporting bureaus. Documents like:

• Bankruptcy,
• Tax liens, and
• Court judgements.

Once recorded on public record it will remain that way for at least 7 years.

Payment History

Your payment history is the overall primary contributor to calculating your credit score. New payments will cause some degree of credit fluctuation. Additionally, payments towards loans, mortgages, or auto loans may contribute to increases in your credit score!

A 7 point drop in your credit score is a common occurrence during month to month fluctuations, but it is still worth reviewing your credit report to verify nothing serious is looming.