Surprise, Surprise: Why Is Your Credit Score Sudden Lower?

The idea behind a credit score seems simple enough: don't get into debt and don't use money or borrow (or at least limit it), and your credit score will flourish.

What we believe to be correct about our credit scores and the actual reason for their fluctuation can be two entirely different things.

Have you ever paid a bill late and thought nothing of it, other than an "oh, well" moment? Not paying on time can have a profound negative effect on your score, explicitly lowering it. Anything beyond 30 days and now you're talking about collections.

Paying late on a bill is something that most of the time is universally understood as being bad for your credit score, but did you know that if you have lines of credit open and you don't use them that also is terrible as well? Most people assume that when it is time to crack down on the use of credit cards, they should stop using them altogether or cancel the ones you aren't using. That isn't going to do much to help your score; in fact, it most likely will do the opposite. Part of maintaining good credit is paying off what you owe in full and having that sort of revolving door (buy something, pay it off, repeat, etc.) is what shows being able to manage credit the right way. Closing accounts is a panic move, basically, and creditors and lenders pick up on that, and your score suffers as a result.

Also, you might be equally surprised to know that your credit can also take a significant hit if you're trying to do something nice for someone (i.e., Signing for a loan or co-signing), and you end up losing points in the process.

The idea of co-signing for a loan is scary enough given that you'll be responsible for that loan if the primary person can't hold up their end of the deal and make payments on time (or at all). More importantly, it shows on a credit report initially even before the primary person makes one single payment. While that might not mean much for some, having yet another inquiry and piece of debt, you being on the hook is another reason your score might get docked a few pegs.

Keeping tabs on your credit score is paramount but so too is knowing how to keep it above water and thriving. That includes understanding that what may feel like an acceptable decision or even one that feels like a lateral move actually could be quite detrimental to your score.

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