Understanding why credit scores can drop

Credit scores will fluctuate over time, even with the most responsible credit use. Understanding why they change is an important part of managing your financial health. Follow these steps to understand what causes credit score changes, what you can do about it and how to prevent future credit score drops. 

Reasons why your credit score can drop 

Below are some common factors that may cause a decrease in your credit score. 

  • Late or missed payments. Payment history accounts for 35% of your FICO® Score*, making it the most important factor. Just a single missed payment can have a large and lasting impact on your credit. 
  • Increased credit utilization. Your credit utilization ratio is the second most important factor in calculating your FICO® Score. Ideally, you should aim to keep your credit utilization ratio below 30%.  
  • New applications for credit. Whenever a lender checks your credit in relation to a credit application, a hard inquiry shows up on your credit report. While this can temporarily lower your score by a few points, many hard inquiries during a short period can have a compounding effect on your credit score.  
  • Information reported in error. Although rare, payment history or other account information can be inaccurately reported to the credit bureaus. Unfamiliar information in your credit report can also be a sign that you may have been a victim of identity fraud.  

Check your credit report 

Keeping close tabs on your credit report can help you stay on top of any changes to your score and ensure that the information on your report is accurate and up to date. At the very minimum, it’s a good idea to obtain a free report from each credit bureau, which you can do through AnnualCreditReport.com

Dispute credit report information you believe to be incorrect 

Checking your credit regularly can help you spot inaccurate information that may be the result of fraud or due to a creditor inaccurately reporting account information. If you find something you believe to be incorrect, it’s important to take action immediately—especially if you suspect fraud. You have the right to dispute information in your credit report by contacting the credit bureau on whose report the information appears. 

Take actions to improve your credit score 

Now that you know what factors can impact your credit score, here are some actions you can take to improve it. 

  • Pay your bills on time. Improving your payment history is a key part of getting your score in shape, and a long history of on-time payments can help you achieve excellent scores. Setting up automatic bill payments can help ensure you don’t miss any deadlines. 
  • Keep a low credit utilization rate. Running up credit card balances or maxing them out can cause your score to drop. Paying more than the minimum can help you pay down balances faster. 
  • Don’t apply for too many new credit accounts. Applying for new credit can help reduce your utilization rate, but if you apply for too many new credit cards or different types of loans, you could get hit with multiple hard inquiries.  

Regularly checking your credit report and ensuring its accuracy is the best way to keep your score on a positive trajectory. 

For more information about understanding your credit score, see the following articles:  

Barclays offers card customers online access to their FICO® Credit Score at no cost. Follow this link to log in and view your score.** 

*FICO® is a registered trademark of Fair Isaac Corporation in the United States and other countries. Barclays and Fair Isaac are not credit repair organizations as defined under federal or state law, including the Credit Repair Organizations Act. Barclays and Fair Isaac do not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history or credit rating. FICO and “The score lenders use” are registered trademarks of Fair Isaac Corporation in the United States and other countries. 

A credit score is a 3-digit number calculated using information on a credit report that serves as a numerical representation of a person’s creditworthiness. A credit report is a summary of your credit activity such as the payment history and status of your credit accounts which potential lenders use to offer you credit and on what terms. Your FICO® Credit Score and key factors are based on data from third-party providers who are not affiliated with Barclays. Barclays does not guarantee the accuracy of any credit information that is provided to you by these third parties. 

**FICO® is a registered trademark of Fair Isaac Corporation in the United States and other countries. Barclays offers FICO® Score access at its sole discretion. Not all accounts will have a FICO® Score available. FICO® Score access is not a permanent feature of your account and may be removed at any time. To view your FICO® Score, your account with us must be open, active (having activity within the past 150 days) and in good standing.