Why Credit Scores Drop Even When You’re Doing Everything Right
Nothing is more frustrating than checking your credit score and seeing it fall. Especially when you’ve been making payments on time, keeping balances low, and trying to do everything “right.”
The truth is, credit scores don’t just respond to mistakes.
Sometimes they shift because of timing, algorithms, or normal fluctuations most people never hear about.
Here’s why your score can dip even when you’re being responsible, and why it’s not always a bad thing.
1. Your Credit Utilization Shifted. Even By a Little
Utilization is the percentage of credit you’re using, and it updates every time your lender reports.
That means:
- You could pay your card in full
- Never miss a payment
- Spend normally
and your score might still drop simply because your balance was reported before your payment posted.
Even small changes can move your score 5 to 20 points.
2. A Card You Weren’t Using Went Dormant
When you don’t use a credit card for a long time, lenders may stop reporting activity, or even close the account.
Both can temporarily lower your score because:
- You lose available credit
- You lose account age
- You lose positive payment history
A quick fix? Use every card at least once every few months.
3. Your Mix of Credit Changed
If you pay off a loan completely (which is a good thing), it can still shift your credit mix.
FICO and VantageScore both like to see a blend of:
- Revolving accounts (credit cards)
- Installment accounts (auto loans, personal loans, etc.)
Paying off a loan improves your finances, but it may temporarily lower your score until other data balances out.
4. A New Account Lowered Your Average Age
New credit is helpful long-term, but in the early months it lowers your average age of accounts, and that can cause a small dip.
This is totally normal.
Scores usually bounce back within a few months as positive payments stack up.
5. There Was a Soft Update to Your Report
Sometimes your score changes even when nothing obvious happened.
Credit algorithms constantly adjust based on:
- Newly posted data
- Industry score recalibrations
- Shifts in your overall risk category
These fluctuations are usually minor and temporary.
The Big Picture: Drops Are Normal. Trends Matter More
Your credit score isn’t meant to stay the same every month.
It’s designed to react to real-time financial data, which means it will move up and down, even when you’re being responsible.
What matters is the trend, not the blips.
If your habits are strong (low utilization, on-time payments, active accounts, and steady monitoring), your score will trend upward over time.
At CreditNerds.com, we teach our clients to stop stressing over small dips and stay focused on the long-term path to excellent credit. Start your journey to better credit here.
