Reasons That a Credit Report Lowers

There are a number of factors that credit reporting agencies use in determining a credit score. While most consumers know that major events such as foreclosure or bankruptcy will damage a credit score, there are many smaller factors that can also cause a credit score to lower. By understanding these factors, a consumer can work to maintain or improve her current credit score.

Late Bill Payments

Paying bills late can cause a credit score to drop. In fact, a consumer's record of paying bills is the largest factor in the calculation of a credit score. While a payment that is late by a few days will have only a small impact, if any, consistently paying bills late or having bill in collections can be devastating to a credit score. The good news is that a consumer's record of recent bill payments has a larger influence on a credit score than payments made in the past. This means that a consumer with problems paying bills late in the past can reduce the impact of these late payments by diligently paying all bills on time.

Increasing Debt Levels

A consumer that uses all or most of his available credit will have lower credit scores than a consumer that does not. Even if the consumer is making all of the payments on the debt on time, the credit scoring models show the consumer as a greater credit risk. This means that a consumer who is accumulating debt, but not added to his available credit will see a decrease in his credit score.

Closing Old Accounts

The age of credit accounts is another factor in the calculation of a consumer's credit score. Older credit accounts show that a consumer has a record of being responsible with debt over time. By closing an old, unused credit card, a consumer may actually cause her credit score to lower. Though the impact might not be significant, the change may be enough for a lender to deny credit or only offer higher interest rate loan products to a consumer with a mediocre credit history.

Not Having Payments

A person that does not have any debt to make payments on will have little information sent to the credit reporting agencies. This lack of information will lead to a decline in the consumer's credit score. While running up debt just to have something to pay is probably not a good idea, a consumer who might need a mortgage or other loan in the future may want to consider using a credit card to make some small purchases from time to time. The consumer can then pay the account in full each month to provide current information on his credit report.