Why your credit score goes down

It can feel alarming to check your credit score and see it go down. But a drop almost always has a reason. Once you know the cause, you can take steps to fix it.

Here are the most common reasons a score falls.

You missed a payment. This is the biggest one. Payment history makes up about 35% of your score. Even one late payment can cause a noticeable drop. The later the payment, the bigger the damage. If you missed one recently, pay it as soon as you can. One late payment won't ruin your score forever.

Your credit card balance went up. This is called credit utilization. It measures how much of your available credit you are using. If your limit is $500 and you charge $400, that is 80% utilization. High utilization hurts your score. Try to keep balances below 30% of your limit when possible.

You applied for new credit. When a lender checks your credit before approving you, it creates a hard inquiry. Each hard inquiry can lower your score by a few points. This is usually temporary. Shopping around for a loan or credit card within a short window often counts as just one inquiry.

An account was sent to collections. If a bill goes unpaid long enough, the lender may sell the debt to a collections agency. A collections account can seriously hurt your score. It stays on your credit report for up to seven years.

You closed an old account. Closing a credit card can raise your utilization and shorten your credit history. Both of those things can lower your score. Think carefully before closing an old card, especially your oldest one.

There is an error on your report. Sometimes a score drops because of a mistake. Someone else's account could appear on your report. A payment could be marked late when it was actually on time. Check your free credit report at AnnualCreditReport.com. You have the right to dispute errors.

What to do next. Start by pulling your credit report so you can see exactly what changed. Look for missed payments, high balances, or anything that looks wrong. Then pick one thing to address. Even small steps can help your score recover over time. You do not have to fix everything at once.