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How Much Can Your Credit Score Drop in a Month?

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If you’re dieting, you’d no doubt love to step on the scale and see a big drop in the numbers displayed. But when it comes to things financial — the money in your retirement account, your paycheck, or even your credit scores — seeing those numbers go down is generally not welcome news.

When it comes to your credit scores, a drop in your scores may mean higher rates or even a rejection letter when you apply for a loan. The question is how much — and how fast — can your credit score drop?

In fact, changes in your credit information happen more often than you may realize. And sometimes those changes result in large fluctuations in credit scores, as these Credit.com readers have shared:

  • I returned an item and the creditor never updated my account so now I am being hit with a 30 days no payment…That mistake sent my credit score from 800 to 720.
  • I don’t understand how my credit score dropped 43 points when I paid off an auto loan…
  • I check my credit score frequently, and noticed a negative report (collection account) to my credit. My credit score dropped 100 points when that hit.

The Ever-Changing Credit Score

Information is constantly being reported to the credit reporting agencies, and every time new information is used to calculate a score, the resulting score may be different than the one previously calculated.

“In theory, if a consumer has 10 accounts in their credit files, that consumer’s score might change 10 times a month if a score is pulled after each single account is reported,” warns Sarah Davies, Senior Vice President, Analytics, Product Management and Research for VantageScore. “There are roughly 200 million consumers with credit files in the United States, and approximately 36 billion pieces of credit data are recorded on their credit files every year. That’s an average of more than 15 changes to a credit file each month for each consumer.”

Of course, many changes won’t result in a significant difference in your scores. An inquiry, for example, will usually shave off only a few points, and some inquiries don’t count at all. But there are some events that can drop your scores significantly. These include the addition of a very negative item such as a collection account, judgment, bankruptcy or tax lien. Even a single late payment can cause a double-digit drop in your score.

Ironically, the better your credit, the bigger the decrease may be. If you’ve always paid your bills on time and have an excellent score, a new negative item can have a big impact.

It’s Not All Bad News

But what goes down can also go up. Davies explains that in many cases, changes are positive:

Roughly 70% of credit scores change by up to 20 points in any given 90-day window. A 20-point change isn’t very significant most of the time; a 40-point drop is more of a concern. As the chart shows below, most consumers experience a score improvement rather than a score drop. In fact, 56% of credit scores shift higher, while 34% drop, and the remaining 10% stay the same. Of those that experience a score drop, 6% see a drop of more than 40 points.

Credit score change chart

Whether you already have good credit and want to keep it that way, or you are trying to work your way up, you’ll want to get your free credit reports to make sure they are accurate. Then get a free credit score to see where you stand (which you can do using a tool like Credit.com’s Credit Report Card) and to find out what areas of your credit you may need to work on.

The fact that more than half of credit scores improved over a 90-day period should offer you hope. When it comes to your credit, there are almost always things you can do to help move those numbers in a positive direction.

More on Credit Reports and Credit Scores:

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  • http://www.credit.com/ Credit.com Credit Experts

    The difference in scores can be puzzling, yes. This post may help explain it for you: 3 Reasons Why Your Free Credit Score Looks Wrong. And congratulations on working to improve your scores.

  • http://www.Credit.com/ Gerri Detweiler

    Have you checked all three of your credit reports to make sure they are reporting correct (and similar) data? I recently found an error on only one of mine which meant my scores calculated using that one agency’s data were very different than the others.

  • http://www.Credit.com/ Gerri Detweiler

    There is no specific number of points in an inquiry will drop your credit score. We’ve written more about inquiries here:
    Should You Be Worried About Credit Report Inquiries?

    And it’s not paying your charges in full that helps your credit scores; it’s lowering your debt usage ratio that can be useful. If you have a card with a zero balance that account is not hurting your credit scores and so charging something and paying it in full is not going to make a difference. But if you have a card with a balance that is at, say 50% of the available credit, then paying that balance down can help your scores.

    The reason that no one can give you a specific number of points is that it depends on all the information in your scores. Credit scoring algorithms are sophisticated and a hard inquiry on one person’s report can affected differently than a hard inquiry on another persons report.

    Perhaps this article may help: How Credit Scores Are Developed

  • http://www.Credit.com/ Gerri Detweiler

    Heather – How are you checking your credit scores? Did you use the same exact service for the score that showed a 720 and the subsequent lower score? If the score was pulled through a different service or a different bureau the number may be quite different.

  • http://www.Credit.com/ Gerri Detweiler

    The scoring model they use when checking your score and the model you use when checking your score may be different, which may account for the discrepancy.

    But it sounds like there may be a mistake on the underlying report. So order your report from Experian (actually I recommend you get your reports from all three agencies) to see if there is a mistake.
    Here’s how to get your free annual credit reports.

    Paying off a mortgage loan doesn’t directly boost your scores. But it shouldn’t cause it to drop either.

  • http://www.Credit.com/ Gerri Detweiler

    It definitely sounds like there is a late payment on there – that could trigger that large of a drop. Did you try getting your free reports from AnnualCreditReport.com? If you can’t get them online they will give you instructions for mailing in a request. It really sounds like you need to see the report to see what’s going on with the delinquency they are reporting.

  • danielle laffin

    My boyfriend had a score of 720. Recently i needed help with a dental emergency and he got a carecredit card for 3 grand that i used. The demtist did the full 3 grand worth of work. Im on a plan to pay 80$ a month. After the first payment, not late, his score dropped 100 points. In the event i just pay off the full amount, how can we get his score back. This account is brand new and not in collections. I dont understand how that happened.

    • http://www.Credit.com/ Gerri Detweiler

      A new credit card is a risk factor and one that is maxxed out is especially problematic as the debt usage ratio is 100%. Once it is paid down, he should see his scores rebound. (Provided of course that this card is the problem and not something else.) If you continue to pay the minimum payment, unfortunately, it will take a while as the balance compared to the limit will continue to be very high. Read:
      Tips for Improving Your Credit: Your Amount of Debt

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