Home Credit Score Why Does Your Credit Score Drop When You Check It?

Why Does Your Credit Score Drop When You Check It?

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Credit score has become a very important issue today. Individuals need to check and improve their credit score. This is because they can get the credit or credit card necessary to finance their expenses. Once you have a good credit score, you can get the credits you want and raise your credit card limit.

Individuals who are conscious of improving their credit score often check their credit score. When they see a drop in their credit score, they want to know and correct it. If your credit score drops when you check it, the first reason that comes to mind is credit inquiries. However, your credit score does not drop when you check it. Because it would be a soft credit inquiry.

Credit inquiry is of two types: hard credit inquiries and soft credit inquiries. When you apply for a loan from a lender, the lender wants to review your credit score and credit report. This is called hard credit inquiry. However, if you or a lender you have previously borrowed checks your credit score and credit report, this is called a soft credit inquiry. Hard credit inquiries cause your credit score drops when you check it. Soft credit inquiries do not cause your credit score drops when you check it.

How much does your credit score drop when you check it due to credit inquiries?

Your credit score does not drop when you check it, because it is a soft credit inquiry.  However, in hard credit inquiries, your credit score will drop depending on how many credit inquiries you have in days. For example;

  • If you have a hard credit inquiry 4 times in 14 days, your credit score will drop by an average of 4 scores.
  • If you have a hard credit inquiry 4 times in 30 days, your credit score will drop by an average of 10 scores.
  • If you have a hard credit inquiry 4 times in 60 days, your credit score will drop by an average of 29 scores.
  • If you experience hard credit inquiry 4 times in 90 days, your credit score will drop by an average of 52 scores.

However,in order to avoid your credit score drop when you check it, you should apply by receiving offers from more than one lender within a few days. Because, if you experience a hard credit inquiry several times in a few days for the same product or for the same reason, you are considered to have experienced a hard credit inquiry. This is because it allows you to evaluate other lenders without feeling obliged to take out loans from the first lender. In other words, by creating competition among lenders, it is aimed for the consumer to make the best use of loans.

What are the reasons why your credit score drops when you check it?

If your credit score drop when you check it, there can be several reasons. But all of these reasons are based on your credit reports. Your credit score is generated in accordance with your information in the credit reports. If your credit report has missing or incorrect information, you’ll see your credit score drop when you check it.

  • You may have forgotten a repayment.

The most influencing factor on the credit score is payment history and its impact on your credit score is 35%. Nowadays, many people can forget their payments because they don’t sign up for direct debit and this reduces their credit points very much. If your credit score drop when you check it, this may be the reason. Even if you always make a full and timely payment, if you forget a payment, your credit score will decrease and will remain in your credit reports for 7 years. But don’t be afraid, because the effect will gradually diminish over time. To do this, all you have to do in this process is to continue to make your payments fully and timely.

  • Your credit utilization increased;

The second factor that most influences the credit score is the credit utilization rate and its impact on your credit score is 30%. If your credit score drop when you check it, you may have received a high amount of loan, such as a mortgage loan. The credit utilization rate indicates what percentage of your total credit balance you are using as a loan. In order to have a good credit score, this rate must be 30% or less. Otherwise, because your borrowing rate is high, lenders think you’ll have a refund problem. And your credit score drop.

To get rid of the factors that increase your credit utilization, you can:

  • You can contact your credit card provider to increase the limit of your credit card.
  • You can pay some credit debt.
  • If you can’t raise your credit card limit, you can apply for a new credit card.

 

  • You closed an old credit account;

The third factor affecting the credit score is the length of the credit history. If your credit score drop when you check it, it may be because you closed an old account. In particular, this is one of the data used to calculate the FICO score. When you close an old account, you reduce the average credit age. As a loan is extended and lenders see that you’re paying, lenders have more confidence that you’ll pay the debt. For this reason, people who pay for many years are more advantageous than those who create new credit score.

  • You paid off your student or car loan;

Lenders see customers paying more than one type of credit more reliable. When people with a uniform loan borrowing receive any loans other than those loans, lenders cannot trust that they will pay for those loans. If you’ve seen your credit score drop when you check it, it’s because you’re paying out loans that different types of loans, such as student or car loans.

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