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Published 04 October 2022

Why has my Credit Score Gone Down?

There are many reasons why your credit score might go down. Some may only cause temporary dips, while others may take longer for your credit score to recover. Find out some of the common causes of your credit score dropping and how you can improve your credit history.

Credit scores can be somewhat of a mystery, so if you’ve noticed a dip in your credit rating – don’t panic. There are lots of reasons your credit score might go down (or up).

Sometimes minor changes, such as moving to a new address or closing savings accounts you no longer use, may have a minor impact on your credit score, so it’s worth waiting to see if your rating goes up after one or two months.

However, you should contact each credit reference agency directly for more details about significant drops in your credit score as it could be linked to more serious financial issues, such as having a county court judgment (CCJ) on your file or even fraudulent activity.

Keeping an eye on your credit report and checking your credit score regularly can help pinpoint what may have affected your score.

Read on to find out 11 common reasons why your credit score has gone down and the steps you can take to improve your credit rating.

Using too much credit

Using high proportions of the credit available on your credit cards or going over your credit limit can cause your credit score to drop. This is because lenders use your credit usage, which is also called your credit utilisation rate, to decide whether you are a responsible borrower.

Try to keep your credit utilisation rate below 30%. Calculating your credit utilisation is simple. All you have to do is divide your credit card limit by the amount you spend each month. For instance, if your credit card limit is £1,000 and you use around £300 a month, your credit utilisation rate would be 30%.

» MORE: Find out what positively affects your credit score

Missing payments

Late or missed repayments can cause your credit score to go down. This is because any late or missed payments are recorded on your credit report and can be seen by other lenders if they do a hard credit search.

Most lenders are reluctant to approve applications from customers with missed repayments on their credit files because it suggests there is a risk that you won’t be able to pay off your debt.

If you miss several payments your lender may place your account into ‘default,’ which can be more damaging to your credit score. Your lender may take more serious action if you don’t repay. It could apply for a county court judgment (CCJ), which is a legal order requiring you to repay them. They may also send debt collectors to your home to collect payment or assets that cover the value of your debt.

Missing payments and defaults stay on your credit report for six years, so it may take a while for your credit score to recover.

» MORE: Find out the latest tips and advice on how to get out of debt

Having a CCJ, IVA or declaring bankruptcy

Your credit score will be negatively impacted if you have declared bankruptcy, have a county court judgment against you, or an Individual Voluntary Arrangement (IVA).

Lenders are less likely to approve your credit application if you have any of these in your credit report. This is because they show you haven’t been great with managing money in the past. And there is a greater risk you won’t be able to pay them back.

As with missed payments and defaults, CCJs, IVAs and bankruptcy stay on your credit report for six years.

But remember, it’s never too late to clear your debt. Paying off any outstanding CCJs or credit agreement shows lenders that you are taking control of your finances and may improve your credit score in the long run.

Applying for too much credit

Making too many credit applications in a short space of time could damage your credit score. When you apply for new credit, most lenders will run a hard search to look at your credit report and decide whether to approve your application.

Most hard searches are recorded on your credit report for around 12 months and are visible to other lenders. Typically, lenders view lots of credit applications in a short space of time as a sign that you are facing financial difficulty and may not be able to afford repayments. This increases your chances of being rejected for credit, which could cause your credit score to go down.

Try to limit the number of credit applications you make to one every three months. It is also worth using an eligibility checker before applying for new credit.

Eligibility calculators check your credit history using a soft search, which is not visible to lenders. They calculate your chances of being accepted for products, such as credit cards and loans, using data in your credit report.

» MORE: Try our loan eligibility checker

Opening a new account

Opening a new credit account may cause your credit score to fall. However, this is just a temporary change and your credit score should recover quickly.

However, setting up lots of new accounts at the same time may cause longer-term damage to your credit score because this may signal to lenders that you are struggling financially, which may affect your ability to repay.

Closing an old account

Older accounts are considered more favourably by credit reference agencies. This is because successfully managing a credit account over a long period of time shows that you are a reliable borrower.

Closing accounts you have had for a long time may cause your credit score to fall because it brings down the average age of your credit accounts.

The total credit limit across all of your accounts may decrease when you close an old account. So, even if you spend the same amount of money on your credit card, you may end up using a larger portion of your overall credit limit. Using more than 30% of your credit limit could negatively affect your credit score.

Using too much credit indicates to lenders that you are too reliant on borrowing and may not be able to afford the repayments.

» MORE: We explain what a good credit score is for a loan, credit card and mortgage

Financial associations

If you are financially linked to someone with a poor credit history, your credit score may go down. Once you take out shared credit with another person – for example, a joint mortgage or a joint current account – you become financially linked to each other as you will both be liable for the whole debt even if you didn’t spend the money. This is also known as a financial association.

When you apply for new credit, a lender may check the credit history of your financial associate too because they could affect your ability to make repayments.

If your financial associate has a poor credit history – for example, if they were declared bankrupt or have county court judgments (CCJs) – this could increase the chances of you being rejected for credit and cause your credit score to take a hit.

It is really important to review your financial associates and arrange to have anyone whom you no longer have an account with removed from your credit report. To do this, you will need to contact the credit reference agencies and provide proof that your financial association has ended.

» MORE: How does your credit score compare to the rest of the UK?

Not registering to vote

Your credit score might go down if you’re not registered to vote. Most lenders use the voting register to help confirm a customer’s identity and combat fraud.

Not being registered to vote can slow down the application process and, in some cases, you may be rejected for new credit.

You can register to vote online on Once you have checked that you are eligible to vote, all you’ll need to do is complete an online form, which usually takes a few minutes. If that’s not possible, you can also register to vote via post.

Mistakes on your credit report

Mistakes on your credit report, such as typos in your name and address or outdated address information, can cause your credit score to go down. This is because the simplest error can make it harder for lenders to verify your identity.

Your credit application may be delayed if lenders have difficulty proving who you are. And some companies may refuse your application altogether if the details don’t match up.

You can update your name and address on all of your credit accounts by contacting each of your lenders, and then it will be automatically updated on your credit reporter.

It is important to look out for errors in your payment history too. Sometimes missed payments or defaults may be recorded on your file by mistake. You can raise a dispute with the credit reference agency to get this corrected. They will investigate the issue and decide whether it can be removed from your report.

Moving address frequently

Some lenders view frequent changes in address as a sign of financial instability. This may affect your chances of being approved for credit and could affect your credit score. Maintaining the same address, where possible, could help prove that you are a reliable borrower who can afford to keep up with repayments.

However, you can’t always avoid moving home. The most important thing is to keep your account information up to date. Ensuring that you have the right details across your accounts will help reduce any further damage to your credit score.

Fraudulent applications

According to Cifas, the UK’s fraud prevention agency, in the first half of 2022 the number of people being affected by identity fraud has risen by a third over the year, with 136,600 cases recorded. As well as the distress this will cause, it can also have a devastating effect on your credit score.

If someone successfully opens a credit account in your name, you can become responsible for their credit actions. Most criminals disappear with the money they’ve stolen and leave their victims with unpaid debt that could damage their credit scores.

Regularly checking your credit score can help you spot fraudulent activity.

It is important to act quickly if you think you’ve fallen victim to identity theft. You should contact the banks or lenders involved as soon as possible, so they can investigate.

You should also report the incident to Action Fraud, which offers advice and helps prevent other people from falling victim to it.

It is also worth alerting the credit reference agencies about any fraudulent activity, so they can investigate and have them removed from your credit report.

Should I worry about my score going down?

It’s normal for your credit score to fluctuate slightly from time to time due to life events such as moving address, opening a new credit account or closing an old one. In these cases, it’s best to wait and see if your credit score goes up again after one or two months.

If you notice a dramatic decrease in your credit score, it’s important to investigate as it could be caused by a more serious issue. Checking your credit report in more detail will help you find what may be causing your credit score to dip.

Any errors on your credit file should be reported to the credit reference agencies immediately to help resolve the issue as soon as possible. Fraudulent activity should be reported to the police, who will give you a crime reference number, and to Action Fraud which can offer advice and log your case.

» MORE: How to check your credit score

How long does it take for your credit score to go back up?

It could help to think about improving your credit score as like running a marathon rather than a sprint. How long your credit score will take to improve depends on how seriously your credit score has been damaged.

Typically, it takes a few months for minor dips in your credit score to go up, for example, if you have seen a decline due to switching bank accounts. But for more serious decreases, for example, if you have a CCJ or defaulted on repayments it may take longer before your rating improves. And although that damage will stay on your credit file for six years, they should affect your credit rating less over time.

Focusing on getting your finances on the right track by using credit responsibly and making repayments on time should help your credit score to eventually go back up.

Image source: Getty Images

About the Author

Brean Horne

Brean was a writer and spokesperson for NerdWallet who covered a variety of topics including money-saving tips, credit scores and managing debt. With over five years' experience in finance, she…

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