A person using their credit online.

If you are like me, you check your credit score every week. I use a free online credit service, Credit Karma to be exact. It provides me with an update each and every week and helps me keep track of my score.

Checking your score often, you will be aware that your score will very by a few points every time you check it. A little bit of fluctuation is normal but what happens when your credit drops by 20, 30 or more points?

There are a lot of reasons for a credit score to drop. If you have had a major drop, let’s take a look at the biggest culprits.

You Used Your Credit Cards

People do not realize just how much carrying a balance can affect your credit score. If you recently charged a lot of money to a credit card, it can make your score drop dramatically.

Ideally, you want your credit card balances to be 30 percent or below of your available credit. So, if you all of your credit limits add up to $10,000, you should carry a balance of no more than $3000.

Carry a higher balance than 30% and your score will drop.

If you had to use a card for emergency money and this is the cause of your credit score problem, you have two ways to correct it.

First, you can decrease your balances. Keep paying down those cards and quit charging them up. This might take time, but the more you pay the balances down, the higher your score will go. In addition, this is not an all or nothing thing. As your balance drops, your score will increase incrementally.

A second way to solve your problem is to increase your available credit. If you have a $500 balance on a $1000 card, that is 50 percent. If you get your available credit to increase to $2000, your balance drops to 25%. This is a super easy way to get that balance down to the right level but you should still be sure to concentrate on getting rid of that credit card debt.

You Closed An Account

Sometimes, simply closing an account can cause a big drop to your score.This can happen for several reasons.

If you paid off a credit card or cash loan and closed the account, it could have lowered your available credit. That would cause an increase to the percentage of your credit you are using and that would cause a score drop.

Another problem with closing an account is that it could cause your average age of credit to decrease. The average age of your credit and the age of the oldest account are factors in your score. If you close an old account, you make your credit newer and that will hurt you.

Finally, your credit score looks for diversity. If you close an account and it changes the number of different credit types you have, your score could drop. This is commonly seen when people pay off their student loans, only to find that their credit score drops.

You Made A Late Payment

Paying your bills on time is the most important thing for maintaining a high credit score. It represents a full one third of your credit score.

If you recently made a late payment, it could cause your score to fall dramatically. This is true no matter where you are. Even a late payment on a Desoto payday loan could affect you. Ironically, the higher your score is, the more it will fall if you make a late payment.

If this is the case for your credit drop, you only have one option and that is to pay your bills on time from this point forward. If the account in question is caught up, you could call them and ask them to remove the late pay but they are under no obligation to do so.

If you start paying your bills on time, you can start seeing an increase in your score in as little as 6 months. It may take you years to fully recover but you will see small increases along the way.

Your Credit File Contains A New Error

If your score dropped and you did nothing, it could also be an error on your report. Mistakes are made all of the time on credit reports and you could have incorrect negative information on yours. This could cause someone else’s late pay on their installment loan to affect your score. This is why it is so important to check your credit often and sign up for free alerts.

To fix this problem, you will need to first check your full credit report and see if there is negative information on it. Then, you will need to write the credit bureaus and dispute the information.

Once the credit bureau has your dispute, they have 30 days in which to investigate the issue. If the information can not be proven, they must by law remove it from your report.

You Applied For New Credit

Although it will not make a dramatic difference, applying for new credit can decrease your score by a few points.

This is especially true if you applied for credit 2 or 3 times and did it weeks apart. As far as scores go, if you make a lot of inquiries at one time, they generally only count as one strike. That is because it is assumed you will shop around for the best deal on credit.

Making a lot of inquiries separately can lower your score an easy 5 to 10 points.

To remedy this situation, you just need to wait and avoid applying for new credit. Inquiries will stop affecting you after one year.