Maintaining a good credit rating can be a constant battle, especially if you have experienced financial difficulties in the past. Whilst some people may seem to always have a good level of credit, others may feel they are riding a rollercoaster that never seems to stabilise. However, this isn’t anything to do with luck and there is always an explanation behind why your credit score goes up and down. If you’ve recently noticed a change in your score, here are some of the reasons why it may have dropped.
You have applied for multiple credit products recently
It can be easy to keep applying for credit after being declined, however, this will have a detrimental effect on your credit score. Once a lender performs a hard check of your file, this will leave a mark on your credit report so that other lenders can see it. If you then keep applying for different products, they will see this information. If you’ve been declined, you should look for a suitable lender instead that can help. If you need short term loans in the UK to cover a financial emergency, you’ll want to find a lender willing to help those with a low credit score, increasing your chances of approval. Minimising the number of applications you make in a short space of time, or new credit agreements approved together, will avoid your credit score dropping further.
You missed a repayment
Keeping your repayments on any existing borrowing maintained is important to avoid drops in your credit rating. Each time a payment is missed or late, you will need to quickly resolve it, otherwise it will leave a mark on your credit file. This can be one of the most common reasons for people to see drops in their credit score, so as long as you ensure repayments are timely and you have available credit in your account for any direct debits, you can avoid this happening. If you fall into financial difficulties where you cannot maintain an agreement, you should speak to the lender at your early convenience to see if a repayment plan can be agreed upon or the restructuring of your loan. If payments are continuously missed and you build arrears, this can lead to a drop in your credit score and defaulting your account.
Your information is not updated
Whilst most of the information on your credit report should be correct, there can be times where information is not updated properly. An example of this is your address history, as any missing information here can make it difficult for lenders to confirm your identity and mean a drop in your score. This is why checking your full credit report regularly can help you discover anything inaccurate, such as accounts you thought were closed still being open, or out of date arrears payments. You can then dispute any information with the Credit Reference Agency (CRA) so that it can be updated.
Identity theft
A growing problem for many is identity theft, and if you see an unusual drop in your credit rating that you can’t explain, this could be a sign. If you receive alerts from your CRA about changes in your credit score, this can help you stay informed. If you know that you haven’t applied for anything recently and have not missed any repayments, you’ll want to investigate any change. When looking through your credit report, if you do not recognise the recent activity, you’ll want to contact the CRA to flag this as it could be someone using your information to apply for credit. In most instances, this can be quickly resolved, but if you aren’t checking your account activity regularly, you should set up alerts to help.