Australian
Internet Loans
Australian Credit Representative 401491
Australian Internet Loans :: Articles

Why did my Credit Score drop - and how can I fix it?

Why did my Credit Score drop - and how can I fix it?

Why did my Credit Score drop - and how can I fix it?
Your Credit Rating (or Credit Score) plays a very important role in determining your eligibility to get a loan. Here we look at the reasons why your credit score may drop and some handy tips to avoid this problem.

Your credit rating is very important. It is used to determine how much interest you need to pay. It is also a reflection of your creditworthiness.

If you have high credit rating, you can enjoy lower interest charges on loans. Apart from that, you also get higher credit limit and great deals on your credit card.

If you find that your rating has dropped significantly, this may mean that you may have made a financial mistake.

There are a number of reasons why you may suddenly have a lower score.

If you know what these reasons are, there is a chance that you can avoid or at least fix your current dilemma. Here are some possible causes of abrupt score drop and how you may be able to avoid them.

Debt Stressed?
Image for Debt Stressed?If you're struggling to pay your debts and covering living expenses, we're here to help. Through our national panel of Debt Management specialists, we can help customers with $10k or more in debt by consolidating your existing loans, stopping Debt collectors from contacting you and re-negotiating repayments on your terms!

Late Payments

Your payments reflect 35% of your FICO score, regardless of whether you pay on time or not.

If you missed a payment, this will not completely damage your rating. However, if you turn this into a habit, your score will eventually be affected.

Moreover, your creditor may charge you with more fees and you may likely end up having to make many more payments, which could include your credit card bills, immediate fees for missed payments, and charges on credit lines and later, loans.

The only solution to avoid all these is to pay your bills on time.

New Credit Card Application

Applying for a new card when you are struggling with paying another can hurt your credit score. Know that 10% of your credit rating is made up of new inquiries for credit.

New card applications will show on your credit report for 12 months.

If you wish to get a new card, do so with control. If you are to make an inquiry, do it only once as much as possible.

One inquiry is acceptable since your score can rebound within a year.

Credit Card Cancellation

You have the option to close your account if you have credit card debt.

However, doing so will actually damage your score, especially if your account carries a balance.

Another possible scenario is that creditors may cancel your account.

Both scenarios can have an effect on your rating; therefore, avoid credit card cancellation as much as possible.

Unemployment Benefits

If you are unemployed and you get benefits, this will have a slight effect on your score. It is advised that you receive the benefits for a short period only. Although the credit bureaus will not find out if you are unemployed, they will certainly see that your income has decreased.

High Credit to Debt Ratio

Your extended credit will take 30% of your credit score.

Sudden increase in balances without higher credit limit will result to a score drop.

If you have balances, strive to pay them off as soon as possible.

Poor Debt Management

Credit score is not only about what you do with your credit cards. There are other factors that can influence your score.

These include your lines of credit and loan balances, which comprise 30% of your FICO score.

If you have too much debt, your rating will definitely go down. It will also be difficult for you to afford the payments each month.

Hence, you should be able to manage your debt by lowering the amount of money you owe from various financial institutions.

Published: Wednesday, 18th Aug 2021
Author: 260


Finance News

RBA Proposes Ban on Card Payment Surcharges RBA Proposes Ban on Card Payment Surcharges
15 Jul 2025: Paige Estritori

The Reserve Bank of Australia (RBA) has proposed eliminating surcharges on debit and credit card transactions, a move that impacts all major card providers such as Mastercard, Visa, and eftpos. As revealed in a newly released consultation paper, the RBA cites the $1.2 billion annual cost to consumers, highlighting inefficiencies and advocating for a unified approach to card payments. - read more
Future2 Foundation Seeks Nominations for Financial Wellbeing Grants Future2 Foundation Seeks Nominations for Financial Wellbeing Grants
15 Jul 2025: Paige Estritori

The Future2 Foundation has opened nominations for its annual Make the Difference Grants, providing financial support to initiatives that enhance financial wellbeing across Australia. Financial services professionals have until August 21 to nominate local projects aimed at improving financial literacy, assisting those in poverty, supporting disadvantaged women, and benefiting regional and remote communities. - read more
Increasing Number of Qualified Financial Advisers Opt Out of Practice Increasing Number of Qualified Financial Advisers Opt Out of Practice
11 Jul 2025: Paige Estritori

Recent analysis from WealthData indicates a growing trend among financial advisers in Australia, where a significant portion of those who have successfully passed the financial adviser exam are opting not to practice. As of now, 5,096 individuals, representing 33.31% of active advisers, have chosen not to proceed into practice after passing the exam—up from 28.36% a year prior. - read more

Finance Articles

Preparing for Loan Approval: Essential Documents Checklist Preparing for Loan Approval: Essential Documents Checklist
Getting ready for loan approval can seem overwhelming, but having a clear understanding and the right documents can make a significant difference. - read more
Better Borrowing: Strategic Ways to Improve Your Creditworthiness Better Borrowing: Strategic Ways to Improve Your Creditworthiness
Creditworthiness represents a cornerstone in the world of finance, serving as the gauge by which lenders assess an individual's reliability in repaying debt. It's this measurement that can open doors to various financing opportunities or, conversely, become a barrier to accessing essential credit lines. So, what is creditworthiness, and why does it matter? - read more
Top Credit Repair Strategies: How to Overcome Bad Credit in Australia Top Credit Repair Strategies: How to Overcome Bad Credit in Australia
Understanding the concept of creditworthiness is essential, especially when considering the various financial decisions you make in life. In Australia, a good credit score can open doors to competitive loan rates, favorable mortgage terms, and hassle-free approvals for financing. Conversely, bad credit can be a significant roadblock, impacting your financial well-being and limiting your access to financial resources when you need them most. - read more
Debt Management 101: Essential Tips for Millennials in Australia Debt Management 101: Essential Tips for Millennials in Australia
Managing debt is a crucial aspect of financial health, especially for millennials in Australia. With student loans, credit cards, and personal loans, it's easy to feel overwhelmed by the debt landscape. However, understanding your options and making informed decisions can set you on the path to financial freedom. - read more
Preparing for Loan Approval: Essential Documents Checklist Preparing for Loan Approval: Essential Documents Checklist
Getting ready for loan approval can seem overwhelming, but having a clear understanding and the right documents can make a significant difference. - read more
Top 5 Mistakes to Avoid When Applying for Loans Online Top 5 Mistakes to Avoid When Applying for Loans Online
Online loans have revolutionized the way Australians access finance. With the emergence of fintech and the convenience of the internet, obtaining a loan is now faster, easier, and often more customer-centric. When managed responsibly, the online loan application process empowers borrowers with quick funds for life's unexpected expenses or investments. However, the speed and simplicity of online transactions can also lead to common oversights. - read more