Why Has My Credit Score Gone Down? 7 Critical Factors Behind the Decline

Your credit score is one of the most important financial metrics you have. Lenders, landlords, and creditors rely on it to assess your reliability. Yet many people find themselves asking: why has my credit score gone down when they check their reports? The reality is that a credit score drop — especially a significant one — rarely happens by accident. Understanding the mechanics behind these declines can help you take corrective action.

Credit scores operate on a scale from 300 to 850, with 700 or above considered good and 800 or higher deemed excellent. While minor fluctuations are normal and shouldn’t trigger alarm, a noticeable plunge demands immediate investigation.

Payment Behavior: The Foundation of Your Score

Late or Missed Payments Strike the Hardest

Payment history is the heavyweight champion of credit scoring, comprising 35% of your FICO Score — the model used by 90% of major lenders. A single late or missed payment can create substantial damage, particularly once you cross the 30-day threshold. That’s when credit issuers report delinquency to the credit bureaus.

The longer you remain delinquent, the worse the impact. A payment 60 or 90 days overdue inflicts far more harm than one that’s merely a few days late. What’s more, if the debt eventually goes to collections, that collection account becomes a permanent fixture on your credit report for years, creating a ripple effect that damages your creditworthiness long after you’ve settled the debt.

Credit Utilization and Limit Changes

When Your Available Credit Works Against You

Credit utilization — the amount you borrow relative to your total available credit — accounts for 30% of your FICO Score. Most lenders want to see you using 30% or less of your total credit limit. Maxing out your credit cards sends a red flag to potential lenders that you’re financially stretched.

But here’s a twist: why has my credit score gone down even though you haven’t increased your spending? Sometimes it’s because your credit limit was reduced. If your $5,000 credit limit suddenly drops to $4,000, your utilization ratio instantly increases even if your balance remains unchanged. This algorithmic punishment — regardless of your actual financial behavior — can trigger an unexpected score decline.

Account History and Structural Changes

The Paradox of Closing Old Credit Cards

The age of your credit accounts makes up 15% of your score. Long-standing accounts demonstrate a history of responsible credit management. When you close a credit card, especially one you’ve held for years, you lose that positive history, and your average account age drops. This is counterintuitive for many people who assume closing accounts is prudent. In reality, keeping older accounts open — even with zero balance — provides ongoing credit score protection.

Hard Inquiries From New Credit Applications

When you apply for an auto loan, mortgage, or any formal credit product, the lender performs a hard inquiry that appears on your report. While the impact is typically less severe than missed payments, it’s still noticeable and can linger for up to 12 months. Multiple hard inquiries in a short timeframe compound this effect.

Red Flags That Require Immediate Attention

Inaccurate Data on Your Credit Report

Your credit report is supposed to be a factual record, but errors do occur. Inaccurate information — whether from clerical mistakes or fraudulent activity — can unfairly tank your score. This is precisely why monitoring your credit report regularly matters. If you spot errors, document everything and submit a formal dispute to the credit bureaus with supporting evidence. The Consumer Financial Protection Bureau can escalate complaints if the bureaus fail to correct verified errors.

Major Financial Events: Bankruptcy and Foreclosure

The most severe credit score injuries come from foreclosure or bankruptcy. A Chapter 13 bankruptcy or foreclosure lingers for seven years on your credit report, while Chapter 7 bankruptcy remains for a decade. These events don’t just create an initial score crash — they continue to influence your creditworthiness throughout their tenure on your report.

Moving Forward

Understanding why has my credit score gone down is the first step to recovery. Some damage is temporary — hard inquiries fade with time. Other issues, like payment delinquencies, require immediate resolution to prevent further deterioration. The key is to monitor your reports, address errors promptly, manage your utilization carefully, and prioritize on-time payments above all else. Your credit score reflects your financial habits, and conscious management today translates to better lending opportunities tomorrow.