Guest Sign UpLoginNew PostSections ₦0What's Up?DownloadsShopChatToolsAdvertise
Join the Publishers' Program. Get paid for writing.
Recharge DSTV, GOTV, StarTimes, & PREPAID METERS on

Mr A

Understanding Your Credit Score

Credit scores are vitally important in today’s financial world. They provide an indication of your creditworthiness and help potential lenders, landlords, employers, and others decide how responsible you are with your finances. In this guide, we will explore why your credit score may be going down and discuss ways to improve it. By the end of this article, you should have a solid understanding of what factors influence your credit score and how to address potential issues.

Breaking Down A Credit Score

Credit scores are determined using a variety of factors and algorithms, which can change depending on the credit scoring model being used. The most commonly used models include FICO and VantageScore. Despite the variations in models, there are five primary factors that influence your credit score. These factors include:

1. Payment History (35%)

Your payment history is the most critical factor when it comes to your credit score. Lenders want to see that you have a track record of making on-time payments. Late, missed, or insufficient payments can negatively impact your credit score.

2. Credit Utilization (30%)

Credit utilization refers to the percentage of your available credit that you're currently using. It’s important to maintain a low credit utilization ratio, ideally below 30%, as high utilization can signal financial distress and lower your credit score.

3. Length of Credit History (15%)

The length of your credit history is determined by the average age of your credit accounts (loans and credit cards), as well as the age of your oldest and newest accounts. The longer your credit history, the better your score will be, as it showcases more experience in managing credit.

4. New Credit (10%)

Applying for and opening multiple new credit accounts within a short period can harm your credit score, as it may suggest you're experiencing financial difficulties. Each application generates a hard inquiry on your credit report, which can have a negative impact on your score.

5. Credit Mix (10%)

Having a diverse mix of credit (credit cards, mortgage, auto loans, student loans, etc.) can positively impact your credit score, as it shows your ability to manage different types of credit.

Why Your Credit Score Might Be Going Down

There are several reasons why your credit score may decrease. We'll discuss some of the most common causes below:

1. Late or Missed Payments

As mentioned earlier, payment history is the most significant factor in your credit score. Missing or making late payments can result in a decrease in your score. To avoid this, make sure to always pay your bills on time and set up payment reminders or automatic payments if necessary.

2. High Credit Utilization

Maintaining a high credit utilization ratio can lower your credit score. To reduce your ratio, try to pay down your credit card balances and avoid maxing out your credit cards. Keeping your balance below 30% of your credit limit is generally a good rule of thumb.

3. Closing an Old Account

Closing an old credit account may negatively impact both the length of your credit history and your credit utilization ratio. If you need to close an account, consider closing a newer account instead, as this will have a smaller impact on your average credit age.

4. Applying for Multiple New Credit Accounts

Each time you apply for a new credit account, a hard inquiry is added to your credit report. These inquiries can lower your score, and multiple inquiries in a short period may signal financial distress to lenders. To minimize the impact, refrain from applying for too many credit accounts all at once.

5. Error on Your Credit Report

Errors on your credit report can lead to an inaccurate credit score. It’s essential to check your credit report regularly to ensure it's error-free. If you find any mistakes, contact the credit reporting agency and the organization that provided the information to correct the error.

6. Fraudulent Activity or Identity Theft

Unusual or unauthorized activity on your credit report could signify fraudulent transactions or identity theft. If you think you've been a victim of fraud or identity theft, take immediate steps to protect yourself, including placing a fraud alert on your credit report and contacting the appropriate financial institutions.

How to Improve Your Credit Score

Improving your credit score may take some time and effort, but it is possible by following some practical strategies:

  • Make timely payments: Prioritize paying all your bills on time to re-establish a positive payment history.
  • Pay down debts: Decrease your credit utilization ratio by paying off high balances and keeping them low.
  • Use a secured credit card: If you have difficulty obtaining credit, try using a secured credit card to rebuild your credit.
  • Maintain a healthy credit mix: Manage a mix of different credit types to demonstrate your ability to handle various accounts responsibly. However, don't open new accounts just for the sake of diversification.
  • Monitor your credit: Keep an eye on your credit reports and scores to track your progress and ensure accuracy.
  • Ask for a credit limit increase: If you have a history of timely payments, consider asking your credit card issuer for a higher credit limit. This can help lower your utilization rate.
  • Avoid frequent applications: Limit new credit applications to avoid multiple hard inquiries on your report.


Understanding why your credit score goes down is crucial in maintaining a healthy credit profile. By paying attention to the factors that influence your credit score and implementing the strategies discussed in this article, you should be able to improve your credit score over time. Remember, building credit is a marathon, not a sprint - be patient and persistent, and you will see results.

Follow @JalingoHQ on twitter.

Related Topics

Top SectionsSee More

This forum does not have any topics.

Top Posters This Month (500 Credits)
(See More)