Credit scores seem to be all the rage these days. Everyone seems to care about them, they want to know what their credit score is and what it means, which is great because having a positive credit score is very important if you're ever interested in credit. So if you regularly monitor your credit score and you notice a drop, being concerned is a very normal reaction.
A low credit score can make it harder to get a mortgage or a car loan, and it can make borrowing for other things more expensive. Credit reporting agencies like Equifax and TransUnion use very complex calculations to come up with their scores, and small changes in your credit history can cause it to rise or fall. To fix this problem, it's essential to find the cause for the drop and then develop an effective strategy to remedy the situation.
While it might not be easy to identify a specific reason for a drop in your score, there's enough public information available about credit reports and scores where we can figure out the most common reasons for credit score drops. Here are the top seven most common causes for a credit scores to fall:
Your strategy for fixing or rebuilding your credit score depends on the cause for the drop. With something like a missed payment, there's not much you can do other than wait for the information to fall off your report. But if you have a collections account in your history, you may be able to get it removed by negotiating with the collections agency when making a payment. If the cause of the drop is due to false or fraudulent information, reporting the issue to Equifax or TransUnion Canada quickly is crucial. If that doesn't fix the issue, Canada's Office of Consumer Affairs has additional information.
While you can mitigate credit score drops in some situations, prevention is a much more effective overall strategy for maintaining a good credit score. That means paying your credit cards on time, keeping your available credit high, and especially avoiding bankruptcy. A financial coach can help you develop the skills needed to accomplish all these goals. For more advice about credit scores and general financial well-being, you can contact Credit Canada and book a free credit counselling session with a certified credit counsellor. Call 1.800.267.2272 to book today!
Topics: Credit Building
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