Credit Score Gone Down? Here’s What You Need to Know

Finding out your credit score has dropped can feel like a shock, especially if you’re planning to apply for a mortgage or loan.

Many people see their scores change without properly understanding why.

The good news is that most drops in credit scores can be explained and fixed. Let’s look at what affects your score in the UK, why it might have gone down, and what you can do about it.

Understanding Credit Score Changes

Your credit score isn’t set in stone – it moves up and down based on your financial behaviour.

Think of it like a financial report card that lenders check when you apply for credit. The three main UK credit reference agencies (CRA) each hold information about your money habits, from paying bills to managing credit cards.

These agencies don’t share information with each other.

That’s why it’s worth checking all three because a problem showing on one report might not appear on the others. Each agency also uses its own scoring system – Experian scores go up to 999, while Equifax uses 700, and TransUnion goes to 710.

Your score changes whenever new information reaches these agencies.

This usually happens once a month, but sometimes more often. Small changes aren’t always a worry – it’s bigger drops or steady declines that need your attention.

Every person is entitled to ask for a free statutory credit report, from each CRA, allowing you to see the information they hold.

Related: Does Your Overdraft Affect Your Credit Score?

Common Reasons for a Lower Credit Score

Let’s look at why your score might have fallen. Often, it’s something simple that you can fix.

Payment History Issues

Missing payments or paying late hits your score hard.

Even one missed payment can knock points off your rating, and the effect can last for up to six years. If you’ve cancelled a direct debit without setting up a new payment method, this could show as a missed payment too.

Your payment history makes up about 35% of your credit score.

Lenders look at this first because it shows how reliable you are with money. If you’ve missed any payments recently, this could explain a sudden drop in your score.

Changes to Your Credit Use

Using more of your available credit can lower your score.

For example, if you’ve put more on your credit cards lately, this increases your ‘credit utilisation ratio‘ – even if you’re still within your limits. Applying for new credit also causes a temporary dip because each application shows on your file.

Closing old accounts can also affect your score.

This might sound odd, but longer credit histories generally mean better scores. When you close an account, you lose that history and might also increase your overall credit utilisation if you’re still using other cards.

Personal Information Updates

Moving house or changing jobs can affect your score, especially if you haven’t updated your details everywhere.

Being on the electoral roll at your current address helps prove who you are to lenders. If you’ve moved and haven’t registered to vote, this could explain a lower score.

Your score might also drop if you’ve recently cut financial ties with someone – like after a divorce – or if you’ve become financially linked to someone with poor credit. These links happen when you share bills, rent, or a mortgage with someone.

Related: How to remove financial associations from your credit report

Administrative Reasons

Sometimes a lower score isn’t your fault at all.

Errors can creep into your credit file – perhaps someone with a similar name has their information mixed with yours, or a paid bill is showing as unpaid. Identity theft can also damage your score if someone takes out credit in your name.

Banks and other companies sometimes make mistakes when reporting to credit agencies. They might show a payment as late when it wasn’t, or fail to update your balance after you’ve paid off a loan.

Read more: A Guide to Fixing Mistakes on Your Credit Report

Impact on Mortgage Applications

A drop in your credit score doesn’t automatically rule out getting a mortgage, but it might affect your options.

Mortgage lenders look at your whole financial situation, not just your credit history. They’re particularly interested in why your score has dropped and what you’ve done about it.

If you’re planning to apply for a mortgage soon, a broker can help you understand how your credit score might affect your application. They know which lenders are more flexible about credit scores and can often find options you might not know about.

Read more: What Lenders Want To See On Your Credit Report

Steps to Improve Your Score

Quick Fixes

Start by checking you’re on the electoral roll at your current address – you can do this through your local council.

If you spot any errors on your credit report, raise them with the credit reference agency right away. They have to investigate and respond within 28 days.

Look for any old financial links that might be pulling your score down. If you no longer share finances with someone, you can ask for a ‘notice of disassociation’ to break this link.

Medium-Term Solutions

Try to reduce your credit card balances if you can – aim to use less than 30% of your available credit. Keep old accounts open if they’re not costing you anything, as this helps show a longer credit history.

Set up direct debits for regular payments so you don’t miss any by accident. Even mobile phone bills count towards your credit history, so paying everything on time helps build your score back up.

Getting Help

If you’re worried about your credit situation affecting a mortgage application, speaking to a mortgage broker can help.

They understand how different lenders view credit scores and can often find options even if your score isn’t perfect.

Free debt advice is available from charities like StepChange and Citizens Advice if you’re struggling with payments. Be wary of companies promising to “repair” your credit score quickly – there’s no magic fix, but steady improvements will help your score recover.

Your credit score can and will improve with time and the right actions.

Focus on making all payments on time, keeping credit use moderate, and fixing any errors on your file. If you need help understanding your options, particularly for mortgages, a broker can guide you through your next steps.