These red flags of a lowered credit score could mean it’s time to take a look at your credit.

3 minute read

After working your way towards good to excellent credit for years, the last thing you need is for your credit score to go down without your knowledge. Sure, sometimes a lower credit score might be expected, such as if you defaulted on a loan or fell behind on credit card payments due to losing your job or experiencing a medical crisis.

Other times, however, news of your credit suffering can come as a surprise, such as if you’re denied credit when you’ve grown accustomed to quick approval. You don’t have to be caught off-guard when it comes to your credit, though.

Your credit score went down

The most obvious sign your credit took a hit is when you notice a drop in your credit score, which lenders and credit card companies use, along with information from your credit report, to decide whether you’re creditworthy. The lower credit score could be the result of the usual suspects such as late payments or defaulting on credit accounts or loans.

Your credit score may also go down if your credit utilization rate – the ratio of revolving debt you have to your available credit – is above 30%. Financial experts recommend keeping your credit utilization ratio at or below 30%, since the rate makes up around 30% of your total credit score and a high ratio will probably lower the score.

But the decrease in your credit score could also be temporary, due to too many “hard inquiries,” which are requests to access your credit report when you apply for a new credit card, car loan, or other credit. If that’s the case, and you’re paying all accounts on time, your credit score will likely rebound to somewhere close to the previous score soon.

You no longer receive enticing credit card offers

If all those lucrative pre-approved credit card offers you once received in the mail are now replaced by offers for high-interest loans to consolidate debt, something is probably amiss when it comes to your creditworthiness.

Do you have so much debt that your credit utilization ratio shot up to 60%? Has making late payments caught up with you, since payment history comprises about 35% of your credit score? Whatever you suspect, it’s time to get to the bottom of what’s going on, so you can improve the situation and work on increasing your credit score.

To find out where your credit stands, order a free copy of your credit report at AnnualCreditReport.com.[1] Typically, you’re allowed one free copy of your credit report a year. Due to COVID-19, however, you can get a free copy of your credit report every week through April 22, 2022.

You were denied credit

When you always get approved, but a credit card company or bank suddenly denies your credit application, that could be an indicator that your credit isn’t what it once was. At the same time, your credit might still be good but other factors caused the denial.

For example, some credit card issuers won’t approve applicants who’ve recently been approved for a different credit card from that company. Or maybe the credit card issuer got nervous about the amount of credit card debt or the number of credit cards you already have.

Whatever the reason the credit card company denied you credit, it must provide you with an adverse action notice that explains the reasons why your application was denied.[2] Once you know which of your credit factors caused the denial, you can get to work resolving the problem to improve your credit and credit score, applying again later if you wish.

Potential employers back off after a background check

Many employers ask permission to run a background check, which may include a credit history, before hiring potential employees. If your chances of getting hired were excellent before the background check but an employer changes its tune after reviewing the report, your credit could be to blame.

An employer who is considering not hiring you on the background check must first provide you with a copy of the consumer report it used to make its decision and a copy of your rights under the Fair Credit Reporting Act, according to the U.S. Equal Opportunity Commission. You’re then allowed to review the report and offer an explanation for any negative information.


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About the Author

Deb Hipp

Deb Hipp

Deb Hipp is a full-time freelance writer based in Kansas City, Mo. Deb went from being unable to get approved for a credit card or loan 20 years ago to having excellent credit today and becoming a homeowner. Deb learned her lessons about money the hard way. Now she wants to share them to help you pay down debt, fix your credit and quit being broke all the time. Deb's personal finance and credit articles have been published at Credit Karma and The Huffington Post.

Published by Debt.com, LLC