myFICO: 7 Things to Do If Your FICO® Score Drops
June 25 2024 - 12:34PM
Business Wire
For the first time in 10 years, the average FICO® Score of the
U.S. population has decreased. The latest FICO Score population
data points to a rise in debt levels and missed payments, which are
leading contributors driving this drop in average score. Having
good credit can be challenging in a tough economy like the one
we’re experiencing. Here are some actions to consider if your FICO
Score drops, from myFICO.
For more credit education, visit myFICO’s blog at
https://www.myfico.com/credit-education/blog
1. First, determine how much your score dropped
A drop of a couple of points may not cause concern for most, but
a more substantial drop may warrant more attention.
2. Understand why your score dropped.
You may already have an idea of why your score dropped if you
subscribe to a credit monitoring service. For instance, most credit
score monitoring services provide an explanation on the main score
factors most negatively impacting the credit score. Comparing these
score factors between scores can help you understand what is
driving the change in score over time.
Otherwise, if you’re not sure what caused your score to fall,
start by checking your credit report, which can clue you in to your
current score. You can obtain your credit reports here at
myFICO.com or you can get your free reports through
AnnualCreditReport.com.
Once you have your credit reports in front of you, review them
carefully. Look for any information that could have caused your
score to drop. For instance, your score may have been impacted by
recent late payments, high credit card balances, new collections,
or recent credit inquiries.
3. Dispute credit report errors.
Credit reports occasionally contain mistakes that could impact
your FICO® Score. If you find errors on your credit report, you can
dispute them with the credit bureaus and the reporting creditor.
They’ll review your dispute and correct any confirmed errors.
4. Address late payments.
Because payment history is the biggest factor in your FICO®
Score, late payments can cause a significant dip in your score.
After just one 30-day late payment, even an excellent score can
drop significantly. The further behind you are on payments, the
worse it is for your score.
Bring your past due accounts to current by making up any
recently missed payment and be diligent about paying on time going
forward. You won’t immediately recover the points you lost, but you
can prevent further damage to your score for those missed
payments.
5. Lower your credit card balances.
If you’ve recently made a big purchase or you’ve been relying on
your credit cards more than usual, your credit utilization may have
increased. Using a significant portion of your credit limit can
appear risky to lenders and your FICO® Score may reflect the
increased risk.
When you can afford it, start paying down your balance to lower
your credit utilization. In the future, consider whether you can
pay your balance in full before using your credit card for large
purchases.
6. Make sure your identity hasn’t been compromised.
Realizing someone used your identity to open accounts in your
name can feel frightening. The good news is that you can have these
accounts blocked from your credit report.
First, place a fraud alert or security freeze on your credit
report. The fraud alert warns lenders of potential identity fraud
and requires them to take additional steps to verify your identity
before granting credit. A security freeze offers another level of
protection by locking your credit report from new inquiries. Later,
when you’re ready to apply for credit of your own, you can
temporarily lift the freeze.
The next step is to file an identity theft affidavit with the
FTC. Then, dispute the fraudulent accounts with the appropriate
credit bureaus, providing the identity theft affidavit to help the
credit bureaus with their review and removal of the fraudulent
accounts.
7. Wait before putting in new applications.
As time passes, negative information gradually has less impact
on your credit scores. Even just a few months after you’ve become
current you may see impacts on your FICO® Scores.
There’s no guaranteed timeframe—it depends on the specific
actions that affected your credit score, your credit history, and
how you manage your credit going forward.
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Elizabeth Warren ElizabethWarren@fico.com