It is not clear why your credit score fluctuates. Lenders use your credit score in order to determine how likely you are to repay a loan. This is especially true when you apply for a loan to your home. Here are three common reasons that your score might be dropping. These are the tips you need to boost your score. A clean credit report is essential to boost your score.
Repayment of a loan
You might be curious as to why repaying a loan can impact your credit score. Your credit score can be hurt by being debt-free. Lenders might view you as a threat if you have too much credit. This can be countered by paying off one or more lines of credit to increase your credit.
Applying to a new credit
When applying for new credit, lenders perform hard inquiries and credit checks on you. Although your credit score will not be affected significantly, one inquiry can lower it by up to three to seven points. This drop will even out within a few months. You can limit the number of credit card applications you submit to prevent a significant drop in your credit score. A credit card is a good idea if you have great credit. If you don't, consider a secured credit card.
Med debt repayment
It's not a common question that paying off medical debt could affect your credit score. Many people who have to pay medical bills end up in debt. If you pay the medical bills within the grace period on time, your credit report will not reflect them. Depending on your situation, your medical provider might send your bill to a third-party collection agency, who will report it to the credit bureaus. Although medical bills will not be visible on your credit report for six month, they will be reported by the credit bureaus starting July 1, 2020. Sometimes you might not get any notice from your doctor. In this case, you'll need to pay the debt within the grace period.
Prudently apply for credit
You can lower your credit score by opening new credit accounts. These accounts can have lower interest rates. However, they can still decrease your credit score if not paid on time. You should only apply for credit cards that you actually need, and make sure to pay them off each month. Your credit score will rise if you have multiple credit cards with different limits.
Making hard inquiries
Multiple hard inquiries to your credit report can hurt your chances of getting a loan. This type of inquiry reveals to lenders that you are taking on many debts at once. Many times, auto loans and mortgages get combined. Identity thieves will be able to use your personal information in order to get new credit. This could eventually lead to missed payments.