Why did my score drop?

To learn more about what could have impacted your score(s), it helps to use our See what’s changed tool for one or both credit bureaus:

• TransUnion credit report
• Equifax credit report

Here are some reasons a score can drop:

• Using more of your available credit
• Missing a payment on one of your credit accounts
• Age of credit history shortened
• Having a new hard credit inquiry on your report
• Having a new derogatory mark on your report
• Scoring model changes
• Multiple changes at once

Using more of your available credit

Credit card utilization is the ratio of credit card balances to available credit card limits. In other words, your credit utilization rate is how much of your available credit you’re using at any given time. 

See your credit utilization rate details for each bureau:

• TransUnion
• Equifax

When you use too much of your available credit, potential lenders may worry that you won't be able to pay them back (even if you pay off your balance each month). Depending on the scoring model, credit utilization can be considered a high-impact factor. If your utilization increases during one or more reporting periods, this could cause your scores to drop. 

It’s recommended to keep credit utilization low, ideally under 30%. Read more in our article Credit card utilization and your credit scores.

If your lender reports to the credit bureaus, they can report on new balances, payment activity, credit limit changes and other new info. When your lender reports will depend on your lender, but many report each billing cycle. This is why recent payments can take some time to show up on your credit reports. On Credit Karma, each account listed on your Equifax or TransUnion credit report also has a “Last Reported” date. To find an account’s last reported date, click on the account you’re wondering about, and look at the very top of the Account Details list to find out more.

Missing a payment on one of your credit accounts

Even one missed payment can heavily impact scores.

See your payment history details for each bureau:

• TransUnion
• Equifax

Even if you typically pay off all of your balances on time, just one late payment may take a serious toll on your credit scores. Sometimes even missing one payment can bring down  scores by a surprising amount, even if you’ve never missed a payment before.

Read more about payment history here: What factors affect your credit scores? Payment History

Age of credit history shortened

Age of credit history refers to the length of time you’ve been using credit. Credit scoring models can look at the average age of all open accounts to see that someone has experience using credit responsibly. Opening or closing an account may reduce your credit scores in the short term because it decreases the average age of your accounts. 

See your age of credit history details for each bureau:

• TransUnion
• Equifax

The age of credit history can be shortened when:

1. You close an old credit card account
2. You paid off a student, auto or other type of loan
3. You applied for a new loan or credit card

Read more about age of credit history here: How does age of credit history affect credit scores?

Having a new hard credit inquiry on your report(s)

When you apply for certain financial products such as credit cards or loans, you usually need to authorize the lender to run a hard inquiry on your credit. Your scores may dip temporarily, but can recover over time depending on a number of factors, including whether you practice responsible credit habits. 

See your hard inquiries details for each bureau:

• TransUnion
• Equifax

Hard inquiries generally occur when a financial institution checks someone’s credit when making a lending decision. 

A hard inquiry tends to cause a temporary drop to credit scores and may be removed from credit reports after around two years’ time. 

Read more about hard credit inquiries here: Hard and soft credit inquiries: What they are and why they matter 

Having a new derogatory mark on your reports

Derogatory marks are negative indications on your credit reports that can lower your credit scores and stay on your credit reports for a substantial period of time. In many cases, derogatory remarks can stay on your credit reports for seven to ten years.

See your derogatory marks details for each bureau:

• TransUnion
• Equifax

Derogatory items may include (but are not limited to):

• Collections account
• Bankruptcy
• Civil judgment
• Foreclosure

Read more information about derogatory marks here: What are derogatory marks? 

Scoring model changes

Credit scoring models might change how they weigh different factors and your scores could adjust based on these changes. Scoring models are kind of like a secret recipe. Since the credit bureaus and credit scoring companies don’t share all the details of their scoring models, Credit Karma doesn’t know when recipes are changed or what ingredients are getting adjusted.

Ream more information about credit scoring models here: How to Understand Credit Scores

Multiple changes at once

Sometimes multiple changes to your credit can happen at the same time, making it hard to pinpoint exactly which change caused a score drop.

For example, let’s say you take out a new credit card. This could cause a chain reaction of events, depending on your individual credit situation. When you apply for the card, you’ll receive a hard inquiry. Then, depending on the amount of the card’s credit limit and how much of it you use, your credit utilization may go up or down. Your average age of credit history may be shortened. But, if used correctly, having another line of credit may help strengthen your credit profile in the long term.

Keep an eye on credit factors and pay attention to how changes to each one can affect your credit.