Why is my credit score dropping

Credit scores go down for several reasons. To find out what’s causing a drop in your credit score, keep a regular eye on your credit score and credit report. Many contributing factors that influence credit scores are detailed in your credit report, including payment history, the type and size of credit, application frequency and directorship/proprietorship information.

Credit scores are calculated at a point-in-time and will change each time new information is added to your credit report. Keeping a watch on your credit profile can help you understand and address the reasons behind a drop in your score.

[GetCreditScore lets you check your credit report overview (including your score) for free online. It takes only a few minutes to complete our registration process so that you can quickly proceed to review your file.]

Credit scores can sometimes fluctuate without your involvement. For instance, falling victim to identity theft may result in unauthorised accounts opened in your name, which are then recorded on your credit report and may affect your credit score. Living overseas for an extended period can also cause score changes because less credit history is recorded on your report, affecting your score.

Late payments

Payment history makes up a significant portion of your credit score. Missing repayment deadlines on home loans, credit cards, utility bills, or other financial obligations can be a primary cause of a credit score drop. Even delayed Buy Now Pay Later payments can leave a mark.

Tip: Set up automatic payments and alerts to remind yourself of due dates and avoid late payments.

Growing debt

Defaulting on loans or having accounts sent to collections can severely damage your credit score. A consumer payment default is defined as $150 outstanding and exceeding 60 days overdue (and any grace period). Credit providers, such as phone companies, can report these defaults to a credit reporting bureau such as Equifax provided they have taken steps to warn you in writing.

Tip: Reach out to your credit providers to discuss hardship options. Taking steps to pay off debt demonstrates responsible financial management. This positive payment history can contribute to a better credit score over time.

Too many credit applications

Applying for numerous credit accounts in a short period can raise concerns about financial stress because you are seen to be shopping-around for credit.

However, of more significant impact is the type of credit provider you choose, the type of account you apply for and the size of your credit enquiry. Mortgages, credit cards, personal loans and store finance may carry varied levels of risk, as does making your credit enquiry with a bank compared with a payday lender who offers high-risk loans.

Tip: Research and choose a reputable provider before submitting credit applications. Space out applications to minimise the impact of hard enquiries on your credit score.

Lack of stability

Recent residential or employment changes may indicate higher credit risk and impact your credit score.

Tip: Show stability in employment and residence to help improve your score.

Business-related issues

As a business director or proprietor, your financial decisions and responsibilities within your company can impact your personal creditworthiness. For instance, your credit report can include disclosures of Phoenix activity - where there is a history of closing and opening new businesses to avoid paying debt.

Tip: Remember that your credit score can be affected by your financial behaviour as a consumer and your behaviour as a business proprietor/director.


Errors in credit reports can occur due to mistakes in the information generated by credit providers such as banks, telecommunications and utility providers.

Tip: Contact the credit provider directly to correct any mistakes on your credit report. Equifax has a handy list of creditor contacts. You can also visit the Equifax Corrections Portal to request that Equifax conduct an investigation and amend your credit report if the information is inaccurate.

Identity theft

Identity theft can harm your credit reports and credit score if fraudsters open new lines of credit or credit cards in your name. As debt accumulates and payments are missed, your scores may be negatively affected due to the payment history associated with the accounts.

Tip: If you are a victim of identity theft, consider putting a ban on your credit report while you work to undo any damage. Being vigilant against signs of identity theft and catching the theft or fraud early can help keep the damages to a minimum.

Knowing your credit score is an important part of staying on top of your finances. Make it a habit to monitor your credit score for FREE regularly with GetCreditScore.