If you’ve noticed your credit score dropping, you’re not alone. Many people in Northern Minnesota and beyond wonder, “Why does my credit score keep going down?” The truth is, credit scores can change for a variety of reasons—some expected, others surprising. Understanding these factors can help you take control of your financial future.

Common Reasons Your Credit Score Drops

Missed or Late Payments

Your payment history makes up 35% of your credit score, according to FICO. Even one missed or late payment can cause a significant drop, especially if you’ve previously had a strong payment history.

Increased Credit Card Balances

Your credit utilization ratio (the amount of available credit you’re using) plays a big role in your score. Carrying a high balance—especially over 30% of your credit limit—can negatively impact your credit score, even if you make payments on time.

New Credit Inquiries

Whenever you apply for a new credit card, loan, or financing, the lender conducts a hard inquiry on your credit report. Too many inquiries in a short period can lower your score and signal potential financial distress.

How Is My Credit Score Calculated 2025

Closing Old Credit Accounts

It might seem like a good idea to close old, unused credit cards, but doing so can shorten your credit history and increase your overall credit utilization, both of which can hurt your score.

Errors on Your Credit Report

Mistakes happen. Inaccurate information, like a misreported late payment or an account that doesn’t belong to you, can drag your score down. Reviewing your credit report regularly can help you catch and correct these issues.

Changes in Your Credit Mix

Your score benefits from a mix of different types of credit—like credit cards, auto loans, and mortgages. If you recently paid off a loan and only have credit card debt left, your score could shift temporarily.

A Collection or Charge-Off Appearing on Your Report

Unpaid debts that are sent to collections or written off as a charge-off can have a major negative impact on your credit score. These marks can stay on your report for up to seven years, affecting your ability to get approved for new credit.

Why Does My Credit Score Keep Going Down? Graphic

You’re More Than A Credit Score—We’re Here to Help

At Northwoods Credit Union, we believe in second chances and smart, local financial solutions. Whether you’re trying to understand your credit score, recover from a financial setback, or plan for a brighter financial future, we’re here for you. Our loan officers work with you and your situation. Contact us now.

Help guide your future credit scores with our budget calculator below!

NCU will be closed on 2/17/2025 in recognition of Presidents Day. Note: Our physical January statements had a date error - please disregard the closure date on them. Thanks!

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