Here’s why your credit score dropped by 100 points

Did you get a mini heart attack after checking your credit score? Has your credit score dropped by 100 points suddenly? Are you wondering why did it happen like that? Well, a credit score can drop by 100 points for various reasons. In fact, a single small late payment is enough to pull down your credit score by 100 points in a few circumstances.

When your credit score is 780, a single small late payment can bring down your credit score to 680. This means a 100 point drop in total. And this is not all. It will take almost 3 years to repair the damage.

Your credit score can go down by 100 points for various reasons. An unpaid collection account can lower your credit score by 100 points when your FICO score is 780. Interestingly, the same collection account will drop your credit score by 40 points when your FICO score is 680. That’s how the credit score model works.

If you have a high credit score, you should be extremely careful at the time of paying bills. Once one late payment is reported on your credit report, your score can drop drastically and cost you a lot of money in borrowing costs. The higher your FICO score, the greater the penalty you have to pay for a single late payment. And, it will take a long time to get back to your previous credit score.

A 30-day late payment on a mortgage can drop your 780 score by 100 points. It will take almost 3 years to return to 780 again. What does this mean? It means your borrowing capacity will be crippled for the next 3 years. You may have to postpone your dreams of buying a new apartment for 3 years. That’s how your life gets affected here.

There are a couple of things you can do to save your credit score even when you’re late on a bill. Some creditors don’t report late payments on credit reports quickly. Even when you’re late on a bill, request your creditors to give you some time to make your account current before reporting it to credit bureaus.

Not many people realize that being 90 days late on mortgage payments is worse than 30 days. But the maximum damage is done by being reported late on your credit report.

A high credit-utilization ratio can drop your credit score by 45 points. It’s enough to disqualify you for a low-interest rate on a loan. Fortunately, you can improve your credit utilization ratio by repaying your bills.

Unpaid collection accounts hurt your credit score too. However, if you pay off collection accounts, then they won’t hurt your credit score anymore. Thanks to the FICO 9.0 formula .

It’s tough to say precisely how your credit score will respond to a positive or negative event. Moreover, there are various types of credit scoring models other than FICO. So don’t take all the numbers mentioned in this post too seriously. The numbers mentioned here give you general guidelines. These are not exact figures.
The magnitude of the impact on credit score can’t be predicted since many other factors make a credit profile.