There are various reasons why your credit score may have dropped. Here are 4 of the most common reasons why this may have occurred:
When you open a new account, you may be offered the option to choose an unsecured or secured card. If you choose the latter, you often open yourself up to a lot of risks. You will need to put up some collateral (a property, for example) to secure the loan, meaning you may likely not be able to use that account for anything other than emergency debt. This is why it is advised that you only apply for unsecured credit cards, as this will limit your risk.
Another common reason your credit has taken a downturn is that you do not pay your bills on time. If you don’t pay bills, you are hit with late fees, over-limit fees, and even legal action from your creditors. In addition to all of this, it may be possible to have your account closed, which means you will not get any other chance of getting another credit card.
Not being able to establish a credit line is another of the most commonly thought of reasons why your score may have fallen. There are often two different sides to this issue, and both should be addressed. While the major negative impact is the inability to build credit, this doesn’t mean that you cannot establish a credit line at all.
In addition to these common problems, there are also more serious reasons why your credit score may have fallen. For example, if you were to have missed one important payment, your score could plummet. This is a problem that is particularly common when someone is suffering from financial hardships or other similar situations. Rather than ignore this fact, it is wise to consult with an expert who can evaluate your financial situation to find out what, if anything, can be done to fix your credit.
Having a bad credit score is frustrating, but that doesn’t mean it is game over. Having a bad credit score means that you will have the opportunity to improve, and there are many different ways to do exactly that. So don’t panic; simply start improving your credit card score today.