Why did my credit score drop Canada?

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Missing or late payments can impact your credit score as payment history accounts for 35% of it. High credit utilization, using over 30% of your limit, affects your score too. New credit applications, closing accounts, or lowering credit limits can also negatively impact your score. Keep an eye out for errors or identity theft. For any confusion or chat, reach out via phone, text, or live chat!

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Credit Score Drop Canada Question

Why did my credit score drop Canada? I want to understand the common reasons for a sudden drop in credit score so I can figure out what happened.

From: Anonymous Question
Location: Brantford, Ontario (ON)
Category: credit rebuilding

Credit Score Drop Canada Answer

Missed or late payments can really give your credit score a nudge in the wrong direction since paying on time counts for 35% of that score. High credit utilization might sound fancy, but it’s just about using more than 30% of your credit card limit, and that’s another big chunk, making up 30% of your score. Applying for new credit? Well, that can ding your score with those hard inquiries that make lenders a little nervous. Closing your credit accounts might seem like a good idea, but it can actually drop your average credit history length (worth 15% of your score) and increase your credit utilization if your balances don’t change. Lowering your credit limits has a similar effect on increasing that pesky utilization ratio. Your credit mix – yes, the 10% of your score that deals with having different types of credit – can take a hit if you make changes there. Errors on your credit report or identity theft? Yikes, those can create score problems that are totally not your fault. And let’s not forget those big negatives like bankruptcy, which leaves a mark for years. Even paying off your old installment loans might leave your credit history feeling a bit short and your score a little lighter. If you’re scratching your head or just want to chat about it, feel free to reach out via phone, text, or live chat!

From: Insider Scott

Office of the Superintendent of Bankruptcy (OSB) Answer

Common reasons for a sudden drop in your credit score in Canada include:

1. High credit utilization: If you are using a significant portion of your available credit, it can negatively impact your score.

2. Late or missed payments: Payment history is a major factor in credit scoring models; late payments can lead to a noticeable decline.

3. Increase in total debt: Taking on additional debt, such as a new loan or credit card, can reduce your score.

4. Credit inquiries: Applying for new credit results in a hard inquiry on your report, which can lower your score temporarily.

5. Old accounts closing: Closing an account, especially an older credit line, can shorten your credit history and affect your score.

6. Bankruptcy or consumer proposal: Filing for personal bankruptcy or initiating a consumer proposal can severely impact your credit score, as outlined in the Bankruptcy and Insolvency Act.
   
   From: OSB Helper
   
   

Related Questions to Credit Score Drop Canada

Here are the top 5 most frequently asked questions related to why a credit score might have dropped, based on common concerns and search trends in Canada:

1. How do missed or late payments affect my credit score?

• Missed or late payments can significantly lower your credit score.

2. Why does high credit utilization hurt my credit score?

• High credit utilization indicates to lenders that you may not manage additional debt responsibly.

3. How do multiple credit applications impact my credit score?

• Multiple credit applications within a short period can indicate to lenders that you are taking on too much debt.

4. What happens to my credit score if I have a lot of debt or collections?

• Having a lot of debt or collections can substantially lower your credit score.

5. Can errors on my credit report lower my credit score?

• Yes, errors on your credit report can lower your credit score until they are corrected.

These questions reflect common concerns and factors that can influence credit scores, as outlined in the provided sources[1][3][5].

If you have a question about debt see our debt questions or ask your own debt related question.

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