There are many methods you can incorporate to increase your credit score. But mostly the reason you can’t build up any kind of credit score is because you are doing something wrong that you thought was right—it happens to everyone, and there is no need to panic since there is a way to solve this problem as well.

Therefore, one must make sure of doing certain things to not let their credit score drop, it can be as simple as paying off the loan that you haven’t yet, keeping tabs of your credit record etc. all these things if taken care of can increase your credit score.

Below are the five reasons why your credit score is dropping.

Reasons no. 1: You went for a new credit card.

Going for a new credit card is a good reason why there is a sudden drop in your credit score. Whenever you go for a new credit card, the card issuers pull your credit report. Why do they do that? Well, they do it to check if you can be eligible for a new credit card by checking credit report. They want to know if you are risk free, if you pay your bills etc. But the downside to it is, it will decrease your credit score once they pull your card for a checkup.

How can you avoid this? It is very simple, you can go to a card issuer and ask for them if you are eligible for a new credit card rather than directly opting for a new credit card. This won’t pull your credit card for inquiry, it will just show you if you can get a new credit card or not.

Reason no. 2:  You aren’t paying your credit card payment.

This is a simple reason that can decrease your credit score. If you do not pay your credit card bills on time, then it has an adverse effect on your credit score. This is one thing card issuers and loan lenders see before opting to give their services as this shows that how responsible a credit card holder truly is.

To rectify this is very easy, all one has to do is pay their pending credit card payments and voila, they are good to go which in return will increase their credit card score.

Reason no. 3: Getting rid of your old credit card.

Getting rid of your old credit card will decrease your credit score. The older the credit card is the more likely it will have a good credit score because credit card lifespan makes up for more than 15% of the credit score. If you have a credit card for more than several years, it will be a good sign for card issuers and mortgage lenders.

Therefore, do not get rid of your old credit card, keep it around.

Reason no. 4: Paying huge loans.

Paying huge loans can have an adverse effect on your credit score. You might think it might increase your credit score, but paying loans and mortgages that are high, such as house mortgage can decrease your credit score, but it will only decrease for a while. This is just a reason why sometimes your credit score can drop.

There is nothing specific you have to do about it except not worry since in time the credit score will pick up, but make sure to not spend on just one large payment, make sure to divide them so it looks as if you pay all of your loans periodically rather than just one after 6 months.

Reason no. 5: Your credit utilization ratio is above 30%.

The general rule is that you must not spend more than your credit limit. Making a large purchase can have an adverse effect on your credit score. For example, if you have a credit limit of $100,000, that means to stay in the perfect credit utilization ratio, you can only spend $30,000 because then your credit utilization would be at 30%, which is exactly the percentage where your credit score can increase. Making large purchases is sometimes a reason for sudden credit drop, so make sure to not do it.

Looking out for all of these reasons can show you why your credit score drops, just solving them can revert your credit score can repair it and even increase it.

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