Your credit score dropped and you don't know why: how to find out

The alert says your score fell 23 points. You didn’t miss a payment, didn’t apply for anything, and the app’s explanation is a vague line about “balances.” The instinct is to blame the bureau and file a dispute. In most cases that’s the wrong first move.

myFICO says a FICO Score is calculated “only from the information in your credit report.” So a drop has two possible explanations: something on a report changed, or you’re comparing two different scores. Both can be found. The causes below start with the ones that are quickest to check.

First, make sure it’s the same score

Before you look for a cause, confirm you’re comparing like with like. A drop can be nothing more than:

• A different bureau. Your app switched from TransUnion to Equifax, or you’re comparing your card issuer’s score with your app’s.
• A different model. FICO 8 and VantageScore 4.0 read the same report differently. So do the older mortgage FICO versions.
• A different date. One score is from last week and the other from this morning, with a reporting cycle in between.

If the source changed, the “drop” may not be a drop at all. Why your three credit scores don’t match explains how far apart legitimate scores can be.

The likely causes, and where to look

A higher balance reported

This one catches people who pay in full every month. Card issuers typically report the balance around the statement closing date. If you put a $3,000 vacation on a card and paid it in full on the due date, the $3,000 still went to the bureaus that month. How often credit scores update explains the timing.

A limit cut you didn’t notice

Issuers can lower limits, and the notice is easy to miss.

Example. Say you carry $1,500 on a card with a $5,000 limit. That’s $1,500 ÷ $5,000 = 30% utilization. The issuer cuts the limit to $2,000. With the same $1,500 balance, utilization jumps to $1,500 ÷ $2,000 = 75%, and you did nothing. If your other cards have a combined $10,000 limit and $1,000 in balances, overall utilization moves from $2,500 ÷ $15,000 = 16.7% to $2,500 ÷ $12,000 = 20.8%. Check every card’s limit as well as its balance. More in when an issuer cuts your limit.

A new account or inquiry

A new card or loan does two things at once. The application creates a hard inquiry, which myFICO says costs most people less than five points. The new account also pulls down the average age of your accounts, which is part of the 15% length-of-history category. A store card opened at checkout counts too.

A paid-off loan or closed card

People are surprised when finishing a car loan lowers their score. The closed loan stays on the report, but you no longer have an open installment account showing monthly on-time payments. Closing a card removes its limit from your utilization math. Both effects tend to be small. Neither is a reason to keep paying interest on debt you could retire.

A new negative item

Look at the payment history grid on every account for a new “30” or worse, and check the collections section. A medical bill or an old utility account can land in collections without much warning, and the CFPB has noted that many collection agencies don’t report to all three bureaus. So a drop can show up on one bureau and not the others.

When the change isn’t yours

An account you never opened, an inquiry from a lender you never contacted, or an address you’ve never lived at all point toward a mixed file or identity theft. Don’t wait on these. Freeze your credit at all three bureaus, then dispute the specific items. Fraudulent accounts and inquiries on your report walks through the order.

A data error is different from fraud: a real account showing the wrong balance, a payment marked late when it wasn’t, or a closed account showing as open. Those are disputable too, and how to dispute a credit report error covers the mechanics. Under 15 U.S.C. 1681i, the bureau generally has 30 days from receiving your dispute to reinvestigate, sometimes extended to 45, and must send you the results within five business days of finishing.

What you can’t dispute

You can dispute information that’s inaccurate, incomplete or unverifiable. You can’t dispute a score, and you shouldn’t dispute an accurate balance, an inquiry you authorized or a late payment that really happened. Those disputes usually come back verified with nothing changed, and before a mortgage an open dispute can complicate underwriting. If the cause is real, the fix is time and lower balances, not paperwork.

A 20-minute check, in order

1. Write down which score dropped, from which bureau and which date.
2. Pull all three reports free from AnnualCreditReport.com.
3. For each card, compare the reported balance and limit with your last statement.
4. Scan for new accounts, new inquiries and closed accounts in the past 60 days.
5. Check every account’s payment grid and the collections section for anything new.
6. Mark anything that isn’t yours or is wrong. Freeze first if it looks like fraud, then dispute the specific item with each bureau showing it.
7. If everything is accurate, note the cause and wait one reporting cycle. If a higher balance caused the drop, models like FICO 8 that read only the latest balances usually reflect the lower one as soon as it reports.