Why has my credit score gone down?

Taking out a new credit agreement, such as a new credit card, overdraft, mortgage, or any other credit product, could temporarily decrease your credit score. 

Other things, such as closing or switching bank accounts, using a higher amount of your credit limit on a credit account, a balance transfer or closing a credit account, may potentially lower your credit score, depending on how long you’ve had the account and what type of credit product it is.

Additionally, having unused existing credit products, such as an inactive credit card, may potentially negatively impact your credit history.

Repeated hard searches carried out in a short period (this is more than 1-2 hard credit checks within a six-month period) can impact your credit score.

Defaults can significantly impact your credit score, as they result from a borrower failing to meet the terms of a credit agreement after missing payments. Learn about how a default can affect your credit score.

Debt consolidation, a form of debt refinancing that involves taking out one loan to pay off multiple debts, can affect your credit score, potentially making it harder to borrow in the future.

Debt consolidation, like any lending, may involve a hard credit search that temporarily affects your credit score. The key risk is missing payments. However, if a consolidation loan helps you manage your debts more effectively and avoid missed payments on other loans, it can ultimately have a positive impact on your credit file.

Products such as Buy Now Pay Later (Klarna, Clearpay, Zilch, Amazon monthly payments, PayPal pay later or PayPal pay by 3), may affect your credit score.

Incorrect information, such as a home address that differs from the one where you’re registered to vote, could also lower your credit score.

If you are financially connected to someone else, such as through a joint account or shared loan, you may be adversely affected if they have a poor credit history, are in arrears with payments, or have County Court Judgments (CCJs) against them.

A variety of factors determine your credit score. However, some things have little impact, such as:

• checking your credit score

• conducting soft credit searches

• student loans do not affect your credit score.

Factors such as your salary or income, whether from employment or Universal Credit, do not affect your credit score.

Gambling does not directly impact your credit score; however, any adverse consequences of excessive gambling—such as high debt levels or missed payments—could consequently harm your credit rating.

Also, using PayPal does not affect your credit score, unless you are using PayPal Pay Later, or PayPal Pay by 3, which are Buy Now Pay Later credit products, which could affect your credit score (such as missing a payment on a Buy Now Pay Later product).

If you're struggling to make payments, talking to your lender about potential difficulties or arranging an alternative payment plan won't directly impact your credit score. However, missing a payment will. It's best to reach out to your lender before missing a payment, as they may be able to offer a temporary payment arrangement or alternative plan, helping you avoid damage to your credit score.

If your credit score has decreased on your credit report, it might be worthwhile to obtain a copy and review its contents as a first step towards improving your situation.

Find out how to get a free copy of your credit report in our guide How to improve your credit score.