Your credit score can change each month depending on the type of activity you have on your account. If you are noticing a dip in your score, you naturally want to determine what's decreasing it so that you can rectify the situation. Look at your recent financial behavior to see if you can find the reason.
New Credit
Opening a new credit account can cause a dip in your credit score and there are plenty of opportunities to start a new credit account. For example, you might not think twice about applying when a cashier offers you a 30 percent discount on your purchase if you open a new store credit card. Additionally, inquiries to your account -- such as when you're shopping for a home or auto loan -- can decrease your score.
Late Payments
When you pay your bills late -- especially more than 30 days late -- the company reports this to the credit company. Late payments will decrease your score and multiple late payments will have an even bigger effect. Occasionally, if you have a good history with the company and the late payment was a single occasion, the company may remove the negative remark from your credit file -- you simply have to call and ask.
Increased Debt-to-credit Ratio
If you've recently acquired a lot of debt, this increases your debt-to-credit ratio and decreases your credit score. The same thing may happen when you close an account that you're not using -- closing the account reduces your amount of available credit, which increases the debt-to-credit ratio. Try to keep all of your accounts open.
Closing Accounts
The longer you've had a relationship with a credit company, the better your credit score will be. If you've recently decided to close some accounts that you've had for a long time, this may decrease your credit score, as it shortens the credit history that you have.
Decreased Mix
The credit bureaus reward you for having a mix of types of credit, including revolving credit -- like your credit cards -- and term loans -- like an auto loan or mortgage. If you've recently paid off an auto loan and no longer have any term loans, this may temporarily decrease your score.
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