How to keep an eye on your creditworthiness!
iQuanti: Seeing a change in your credit score can make anyone a little nervous, especially when that coveted number has dropped a few points. But don’t panic yet. There are a few reasons why your credit score may have changed, and every problem has a solution.
Read on to learn about four possible reasons your credit score changed to better understand them how to build credit.
Payments may affect or affect your credit score. If you’ve missed a payment on one of your credit cards or mortgages, like a car or house payment, you’ll most likely see a change in your credit score. If you’re just a few days behind on your payment, you shouldn’t have any problems. When payments are more than 30 days overdue, creditors report a record of missed payments to all three credit bureaus. So it’s important to pay your bills on time so your score doesn’t suffer.
Closing a credit card can reduce your available credit limit and shorten the length of your credit history. The longer your credit history, the better. Prospective lenders want to see that you have a long history of paying off loans of all kinds. So if you close an account that is ten years old, it can negatively impact the average account age in your credit history. Consider how closing your accounts may affect your score before you do so.
You paid off a loan
Paying off a loan is a satisfying experience worth celebrating, but unfortunately it can also affect your credit score. This is because your credit mix is changing credit cards and installment loans. When you pay off a loan, your overall credit utilization decreases, resulting in a change in your credit score.
The drop in your score is only temporary. As soon as the paid out credit account is officially reported to all three credit bureaus, you will find that your credit score increases by a few points. You can improve your score over time by continuing positive financial habits like paying off your debt and making payments on time.
An error on your credit report
Inaccuracies on your credit report are very common. Errors can include a misspelling of your name, an incorrect address, or a debt that does not belong to you. It’s important to review your credit report regularly so you can keep track of errors like these and contest them when you come across them. Otherwise, you may notice an adverse change in your credit score and not know where it came from. You have the right to dispute any errors you find on your credit report, and lenders have an obligation to investigate the legality of the dispute and correct the error as soon as possible.
The final result
Seeing that your credit score has changed can be annoying, but it’s not the end. Once you figure out what caused the change, you can work on improving your score. Some of these causes include late payments, account closures, loan repayments, and errors on your credit report.
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