It can be scary and confusing if your credit score drops by 70 points or more all of a sudden, especially if you don’t know why. Because I care about my credit score, I wanted to answer this question and give you the most common reasons your score could drop so quickly.
After looking into it with reliable sources like MyFICO, NerdWallet, and CNBC, I found the main reasons why people’s credit scores drop by 70 points or more. Learn more about why your credit score may have dropped so much and what you can do to get it back.
Review Your Credit Report for Errors
The first thing I would do is pull your free annual credit reports from Experian Equifax and TransUnion. Look closely for any errors like accounts that don’t belong to you, incorrect balances, or late payments you didn’t actually miss. If there are mistakes on your report, that could drag down your score.
Dispute any inaccuracies with the credit bureaus right away and provide documentation to back up your claims. Getting errors removed could help boost your score again.
You Opened Too Many New Credit Accounts
When you apply for new credit, like credit cards or loans, the hard inquiries on your report cause small dings to your score. Opening several new accounts in a short period leads to a pile-up of hard inquiries, and that can amount to a 70+ point drop.
I think you should wait six months to a year before applying for any new credit. This will give your score time to recover from the inquiries. To keep your credit score from getting too bad, wait three to six months between applications from now on.
Your Credit Utilization Spiked
Your credit utilization ratio went up if your credit card balances went over your credit limits. In this example, let’s say you have a $10,000 credit limit across all of your cards and a $2,000 balance, which means you can use all of them. This means that if your balance goes up to $5,000, your utilization goes up to 200%, and your score goes down because of it.
To fix this, pay down balances to get your utilization back below 30%, or call and ask for higher credit limits. Lowering your utilization is key to improving your credit score again.
You Missed a Payment
Missing even one payment can send your credit score tumbling 70+ points or more. Payment history is the biggest factor in your score, so a 30, 60, or 90 day late payment is devastating. Luckily, as you get back on track with payments, your score will start to recover.
If money is tight, call creditors to explain and request leniency. They may waive the late fee or agree not to report the delinquency. It can’t hurt to ask!
You Paid Off an Installment Loan
It may seem counterintuitive, but paying off an installment loan like a car loan or student loan can ding your credit, at least temporarily. That’s because your mix of credit shrinks and your credit history length shortens. Once paid off, continue using credit cards responsibly so your score rebounds.
You Closed Your Oldest Credit Card
When you close your oldest credit card, it reduces the average age of your accounts, and credit age is 15% of your FICO score. For example, if you close a 10-year-old card but have a 2-year-old card still open, your credit history length drops significantly, taking your score down with it.
If possible, keep old accounts open and active. If you must close a card, open a new one so your credit mix and history aren’t impacted as much.
You Had Major Financial Difficulties
Events like bankruptcy, foreclosure, debt settlement, or wage garnishment devastate your credit, often wiping out 70+ points instantly. It can take years to rebuild your credit after major derogatory marks like these. Just stay diligent and continue using credit responsibly going forward.
Your Credit History is Very Short
If you’re new to credit, one small misstep can crush your score because you don’t have a long track record of good behavior yet. For example, if you have only 1 credit card for a year and miss a payment, your score will plummet much more than someone with 5 cards over 10 years.
Give it time and continue practicing good credit habits, and your score will become more stable. Short credit history makes you more sensitive to changes.
You’re a Victim of Identity Theft
If none of the above reasons apply, it’s possible identity thieves opened fraudulent accounts in your name and racked up debt, tanking your score. Thoroughly check your report for any suspicious activity. If you find anything, file an identity theft report with the FTC and dispute the fraudulent accounts.
Take Control of Your Credit
A sudden 70+ point credit score drop is alarming, but in most cases, it’s recoverable with some patience and diligence. Now that you know the main culprits that damage your score, you can take action to limit further harm and work on improving your credit again. Monitor your credit reports, keep balances low, make payments on time, and hold off on applying for new credit until your score trends upward again. With prudent credit management, you can bounce back from even a huge credit score drop.
You charged a large purchase onto your credit card
Credit cards are convenient for making large purchases because you dont need to pay all the money upfront, but leaving a high balance on your card will report a higher credit utilization rate (CUR) to the credit bureaus.
Your utilization rate, or your debt-to-credit ratio, measures how much credit you use compared to much you have available. You want to aim for a low utilization rate because using too much of your available credit limit shows that you pose a financial risk to issuers. Experts recommend keeping your credit utilization below 30%, with some even suggesting below 10% to get the best credit score.
Before you charge a hefty expense onto your credit card, make sure you can pay it off in full before the billing cycle ends. Carrying a high balance on your credit card is not only bad for your credit utilization rate, but it will also incur a whole lot of interest.
You applied for a new credit card
Card issuers pull your credit report when you apply for a new credit card because they want to see how much of a risk you pose before lending you a line of credit. This credit check is called a hard inquiry, or “hard pull,” and temporarily lowers your credit score a few points. Hard inquiries remain on your credit report for two years, but FICO (which most lenders use) only considers inquiries from the last 12 months when calculating your credit score.
But hard inquiries on your credit report arent necessarily bad when they happen in moderation. After all, applying for credit cards is a great first step in building credit. When you use credit cards correctly — by charging purchases and paying them off in full by the due date — they can help increase your credit score. If youre looking to build credit, consider the Petal® 2 “Cash Back, No Fees” Visa® Credit Card, which offers cash back, or the Capital One Platinum Credit Card that is designed for average credit applicants.
To reduce the number of unnecessary hard pulls on your credit report, check if you qualify for a new card by using issuers preapproval or prequalification offers. These wont guarantee that youll be approved for the specific credit card, but theyll give you a good idea.
When it comes to actually applying for new credit products, be sure to spread out your credit card applications over time. Only apply for a new credit card every three months, and maybe wait even longer between applications if you have a lower credit score.
Why Did My Credit Score Drop 70 Points? – CreditGuide360.com
FAQ
Why did my credit randomly drop 70 points?
There are several things that can cause your credit score to drop by 70 points, such as: Missed Payments: Loan or credit card payments that are late or not made at all can have a big effect on your score. Payment history is a crucial factor in credit scoring.
Why has my credit score dropped when nothing has changed?
Credit card utilization may have changed, old inquiries may no longer have an effect on your score, and old negative information may have been removed from your report. The average age of accounts is always changing, and your credit mix may be adding or removing a few points as old accounts close or new ones open.
Why would my credit score drop 60 points for no reason?
Minor fluctuations (5–20 points) happen regularly due to normal credit activity, like balance changes or new inquiries. Larger drops (20–50+ points) are less common but typically occur after missing your payments, high utilization, or a negative item being reported.
Why did my credit drop 72 points?
Missed or late payments Your payment history is a factor in determining your credit scores. This factor helps predict the likelihood you’ll fall behind on future bills. Even just one payment that’s 30 days late can cause your scores to drop.