If you’re here, you probably just learned that your credit score has dropped. That’s a terrible feeling, and I’m sorry to tell you that it’s not going away anytime soon. But what exactly is happening? Why did that happen, and how can we fix this mess? Let me explain.
Your credit score dropped 40,50 Points because of these reasons.
- New credit accounts
- New credit inquiries
- New public records
- New bankruptcies
- Student loans, tax liens, and collections (medical bills)
5 Reasons why your credit score dropped
40, 50 points
1. New credit accounts
The first reason is opening too many new accounts –Because new accounts lower the average age of your credit history.
The average age of your credit history is a factor in determining your credit score. The longer your average age of credit history, the better your score will be. So if you have a new account that makes up a significant part of your overall credit, it could be lowering the average age of your accounts and consequently reducing your score.
However, if you have several other accounts that are older than this new one, then it won’t significantly impact the overall calculation for average age.
It’s important to note that simply having an account doesn’t always mean it will help boost or hurt your scores—there is more to consider when looking at how particular cards affect each individual’s personal financial profile than just how long they’ve been open!
2. New credit inquiries
Next, it’s time to stop the new inquiries, the more inquiries are added to your credit file the lower your score will drop. How does this happen, and how can you avoid it from impacting your score?
When you apply for a new credit card or loan, the lender will check your credit history. This is known as an inquiry. There are two types of inquiries:
- Hard Inquiries – these stay on your report for 2 years, and they show up when you check your own report (you can do so at annualcreditreport.com). A hard inquiry only shows up if it results in a denial or reduction of your credit limit (i.e., if you get approved). If it doesn’t result in either of those outcomes, then it doesn’t show up as an inquiry on your credit report and doesn’t affect how much credit you can be offered later on down the road.* Soft Inquiries – these don’t stay on your report for very long – usually only 30 days.*
Opening multiple accounts in a short period of time could be a sign of fraud.
What is credit fraud?
Fraud is a crime that involves obtaining money or property by intentionally deceiving or misleading others. Fraud can include:
- Identity theft is when someone uses your identity to open credit accounts and make purchases.
- Bankruptcy fraud happens when you file for bankruptcy but continue to own assets that could be sold or used to repay your debts.
- Cheating on a test at school or work (this may also be considered cheating).
A high number of new accounts makes you look riskier to lenders.
When you apply for a new account, your credit file is reviewed by both the lender and the credit bureau. The lender will use this information to decide if they want to give you the loan or not. The credit bureau will use it to determine what kind of interest rate you’re offered, as well as whether or not lenders see your application as risky.
The number of inquiries on your credit report can be a big factor in how lenders view you and affect how much they charge in interest rates. If you apply for a lot of new accounts in a short period of time, it can lower the average age of your accounts (as well as increase other factors like debt-to-credit ratio). This can make any future lenders think that there’s something wrong with your financial habits (especially if they don’t know why).
Another reason why multiple inquiries could appear risky is that fraudsters often open new accounts using stolen identities or fake IDs—and creditors may end up having their money stolen too!
3. New public records
What is a public record?
Public records are records that have been created by a government entity and are available to the public. They include things like birth certificates, marriage licenses, property deed transfers, arrest records, and court cases. Public records can be accessed through a county recorder’s office or online.
How do public records affect my credit?
Public records can lower your credit score. Although it’s not a direct effect, public records will decrease the amount of available credit that lenders look at when determining your score. If you have a lot of public records, this could be enough to cause your score to drop by 100 points or more. You should also consider that many employers use credit scores for background checks before hiring someone.
In addition to the negative effects on my credit report and score, there are other consequences too:
- It becomes more difficult to rent an apartment because landlords often check a tenant’s background through criminal background checks (CBC). The CBC will include any criminal record information in their database, including misdemeanors and felonies, as well as any civil judgments such as bankruptcy filings and unpaid debts listed under collections. These types of judgments usually stay on your CBC for seven years from the date they were filed against you but could stay longer depending on what state issued them or if they’re still being appealed through court systems which could extend their length even further depending on how long cases take in particular jurisdictions across America today.* Another consequence is being denied jobs because employers often run these criminal databases before making hiring decisions; if there are negative items listed under a prospective employee’s name, then chances are good those applicants won’t get hired even if they’re qualified based purely off their qualifications alone.* Yet another consequence is getting denied cellphones since most carriers require legal IDs to verify someone’s identity before issuing them, so anyone who has had problems with law enforcement may already meet these criteria anyway due to having been found guilty once already.
Can I dispute a public record on my credit report?
If you believe that a public record listed on your credit report is inaccurate, it’s possible to dispute it. If the credit reporting agency does not respond after 30 days, then you may send them another letter asking for the account to be removed from your credit report.
If you want to dispute an item with the CRA by phone, simply call them and ask for their dispute process. You can also search online for “dispute a public record on my credit report” and see what comes up. The CRA should have information about how to do this if they are in compliance with FCRA laws (Federal Trade Commission). If they are not in compliance with FTC law requirements and regulations, then they must provide their own dispute process documentation, which will be located somewhere on their website.
How long does a public record stay on my credit report?
Public records can remain on your credit report for 7 years from the date they were first reported. If you want to dispute a public record, you must do so within 30 days of the date it was reported. If your dispute is successful, the information will be removed and replaced with a statement that says what has been disputed and why, along with any other relevant information.
Public records can be highly damaging to your credit
Public records can be highly damaging to your credit and remain on your report for 7 years. Your score can drop by more than 100 points if you have a bankruptcy or foreclosure within the last 7 years.
- You can dispute a public record with the credit bureau directly.
- If you’ve been denied or turned down for an apartment, a job, car loan, or other credit because of your credit report, file a dispute form with the Federal Trade Commission (FTC), which oversees all three bureaus: Equifax, Experian, and TransUnion. You’ll have to send copies of everything that’s been done to prove that someone else had committed fraud in using your name, as well as what happened when they disputed it initially so they can investigate further into where this came from and make sure it doesn’t happen again!
If there is a public record on your credit report, you should act fast. Take the time to get in touch with us, and we can help you dispute these negative items.
4. New bankruptcies
The Impact Of Filing New Bankruptcy
When you file for bankruptcy, the impact on your credit score will depend on several factors.
The first is whether or not you have any open accounts with late payments on them. If so, it’s likely that those accounts will be included in a bankruptcy filing and can cost you up to 300 points from your credit score. The good news is that if these accounts are eliminated from your report after the case closes, they won’t affect future scores as long as they remain paid off.
The second factor is whether or not you’re responsible for any open collections or charged-off delinquent accounts that were opened before your bankruptcy petition was filed (or after it was filed but prior to its discharge). Any additional negative information added to your credit report could drive down your score by up to 100 points; however, this isn’t always the case: some creditors may decide not to pursue an account for collection if there’s no legal basis for doing so (i.e., because it was already discharged in Chapter 13).
What is the effect of bankruptcy on credit?
A bankruptcy can have a negative effect on your credit score. This could last up to 10 years and will appear on your credit report for 7 years. It’s important to know that a bankruptcy stays on your report for 7 years, but it may be removed earlier if it’s paid off or if you get married and change your name.
The great news is that you can improve your credit score before filing bankruptcy by paying off debts in collections and opening new accounts with lower interest rates (like student loans).
After the case has been filed, there are things that you should do in order to maintain good standing.
Is the impact of bankruptcy on credit immediate?
Yes. The impact of bankruptcy on credit is immediate, as the bankruptcy will stay on your credit report for 6-10 years from the filing date. It will also be listed as a public record in court documents and collections (if applicable).
That said, there are ways you can rebuild your score after bankruptcy:
What are the benefits of declaring bankruptcy?
The process of declaring bankruptcy allows you to eliminate your debt. By doing so, you can start over with a clean slate and remove any past financial burdens that may be holding you back from moving forward in life.
If the debt is too large or too deep-rooted for you to pay off, then filing for bankruptcy can help relieve some pressure off your shoulders. You don’t have to worry about being hounded by creditors or having them take legal action against you because they know there’s no point trying anymore! It’s like having a safe haven where all those harassing calls stop ringing in your ears…
What are some other ways to improve your credit score after filing a bankruptcy case?
If you want to improve your credit score, here are some ways to do it:
- Pay all of your bills on time. This includes credit card bills and other types of accounts that report to the major credit bureaus. The most important thing to do is to make sure that you’re paying off the balance in full each month by the due date. If you can’t pay off the balance completely, try making more than one payment per month so that at least part of what’s owed is paid off before the bill’s due date arrives again (if possible). This will help build up a good history of paying on time — which is something that creditors like to see when they look at applications for new loans or lines of credit.
- Keep your balances low as much as possible by using only part of what’s available on any given account (ideally less than 30%). That way, even if something goes wrong with one card while there’s still some money left over from another one, it won’t have too big an impact on your financial situation overall (and doesn’t raise red flags about whether or not someone might be overextended).
If you file for bankruptcy, it will be listed as a public record on your credit report.
This will stay on your report for 10 years, which means that if you want to take out loans or open a new line of credit during this time, you may be charged higher interest rates and given less favorable terms than someone who has never filed for bankruptcy.
If you file for bankruptcy, it will be listed as a public record on your credit report. This will stay on your report for 10 years, which means that if you want to take out loans or open a new line of credit during this time, you may be charged higher interest rates and given less favorable terms than someone who has never filed for bankruptcy.
This is why it’s so important to avoid filing for bankruptcy unless absolutely necessary. You can increase your chances of getting approved by checking with your creditors before filing (though they may not tell you the truth) and making sure that all other options have been explored first.
If you are considering filing for bankruptcy, it’s important to understand what this will mean for your credit. If you have good credit now but want to improve your score after declaring bankruptcy, there are other ways that can help you do so without having to wait 10 years.
5. How Student loans, tax liens, and collections (medical bills) affect your credit score.
Student Loans
Student loans can affect your credit score. The amount you owe, the length of time you’ve been paying off the loan, and the type of student loan (such as federal or private) can all impact your credit score.
If you have a large amount of student debt, it may be difficult to get approved for additional credit cards or loans because lenders see large balances as high risk. This can make it harder for consumers with student loan debt to get approved for mortgages and car loans in the future.
In addition to having an impact on whether or not they’re approved for new lines of credit, large amounts owed on student loans could also be hurting borrowers’ current scores—even if their payments are being made on time every single month!
Tax Liens
Tax liens are public records that stay on your credit report for seven years. This means that creditors and lenders can see them, and they will often use this against you when determining whether to offer you a loan or not. It may also affect the interest rate they offer you (if any).
If you are struggling with tax debts, there are ways to get help with this issue. Contact the IRS directly by phone at 800-829-1040 or visit their website at www.irs.gov/Individuals/Get-Help-With-Taxes/Toll-Free-Phone-Numbers
. In addition, consider hiring an attorney who specializes in tax law if you want assistance navigating this process or negotiating for a lower settlement amount than what is currently owed by following these steps:
Include as much information about yourself as possible when filing any documents related to your case (including income levels). This will make it easier for those handling your case at all times because they’ll know exactly who they’re dealing with before calling anyone back once again later down the road.”
Medical bills
- Student loans, tax liens, and collections of medical bills can be a big cause of debt.
- Medical bills can go to collections even if you paid them or have insurance.
- Medical bills are sold to collection agencies when they are unpaid for 180 days.
- You may not be aware that medical debts can be sold to collection agencies after you pay them since the original hospital or doctor may continue billing your insurance company for up to two years after treatment is completed.
What to do about it
You should first get a copy of your credit report and review it for errors. Next, check your score—it’s an important number that can tell you how well you manage money, but it isn’t the only factor lenders use to determine if they will lend you money or not.
If there are any problems with your credit history (like late payments), contact the creditor who made the error and ask them to fix it. If they don’t listen, dispute the issue with one of the big three credit bureaus: Experian, TransUnion, and Equifax.
You may also want to check for fraud by reporting suspicious activity online or over the phone (you can usually do so free of charge).
Conclusion
Remember, this is a big topic, and we’ve only scratched the surface. To learn more about your credit score and how to improve it, we recommend taking some time to go over the links below. The more you know about your credit history, the easier it will be for you to identify areas where mistakes have been made, or improvements can be made.
More on fixing credit