So, you have been paying your bills properly so as to your fix your credit, but you are seeing that your credit score keeps dropping. Well and here, you need to understand that are various reasons why the credit scores are seeing hits. In a credit restoration process, your credit scores can continuously drop due to one of the following reasons.
Limit of Credit Used:
You might be paying on time or you might have paid the entire balance. But, there are chances that your credit scores to drop because you might be using a large portion of the available credit. This would reflect poorly on your credit score.
Yes, we accept that the credit inquiries are performed only when you are about a new line of credit and it would drop your score by a couple of points. But, if you are about to open several credit accounts, then you must remember that they would all make hard credit inquiries. Thus, your score will be dropped substantially.
The Number of Credit Accounts:
You know that when you are about to pay off a loan account, a number of open accounts will not look promising to your lenders. In a similar way, if you are having a number of accounts that are closed at once, it could be interpreted as you do not have the resources to keep your accounts open. Also, if you are opening several accounts at a time, this would also raise a red flag. This is because lenders will see that you don’t have funds to pay your bills.
Overall, good credit is nothing but a careful balance between a good number of open accounts and showing that you are financially stable. It’s always good to consult with the professional credit counselors if you need further assistance on credit repair or credit restoration.