Credit scores can sometimes be a mystery, even to professionals! They can sometimes go up or down for no apparent reason at all.

In this article, I will go over some behind-the-scenes reasons that may cause your credit score to change.

Why Did My Credit Score Go Up for No Reason?

Credit scores can go up due to subtle and unforeseen circumstances which can range from changes in your debt-to-income ratio or improved credit history. Thanks to a new product called Experian Boost, paying your utility and telecom bills on time can also cause your credit scores to go up.

Some other less-obvious reasons that can cause your credit score to go up may include:

1. New Credit Accounts

Opening new credit accounts can affect your credit score because it shows that you’re trying to increase your overall available debt. It can also show lenders that you’re trying to establish a pattern of borrowing by using more than one account at a time. A good thing or a bad thing, depending on how you use it!

2. Change in Employment

Getting a new job is one of the most noticeable ways that your credit score can improve. If you have an irregular income, it’s difficult to manage all of your finances when you don’t know how much money will come in during any given month. Lenders are very interested in knowing whether or not you have predictable income.

If you have stable employment, it can increase your credit score because it shows lenders that you’re more likely to repay the debts if they’ve hired you! It also makes them feel more comfortable about loaning money to someone who is employed.

3. Debt Consolidation

If you’re able to consolidate your debt by combining multiple accounts into one, it can help improve your credit score. To some lenders, this shows that you’ve been successful at repaying a significant amount of debt all at once. It also means there is more of a possibility that the remaining balance will be paid on time.

4. Improved Debt-To-Income Ratio

Your debt-to-income ratio is calculated by dividing your total monthly debts by how much you make in a month. It’s developed from information that lenders have on file, and the lower the number is, the better your chances of being approved for a loan.

If your income goes up or your debt goes down, your debt-to-income ratio may also change. Lenders are able to see if the amount of money you make each month is enough to cover all of your expenses, including loan payments.

5. Closed Accounts Reported as Paid in Full

A major factor that affects your credit score is how much available credit you have versus how much credit you’re using. If your accounts are reported as being paid in full, that’s a good thing because it means you don’t owe anything. It can indicate to lenders that you’re financially responsible and able to repay any money that is loaned to you.

Why Do Credit Scores Change for No Reason?

Credit scores change with or without your involvement on a daily basis. Lenders are constantly checking your credit score to determine if you qualify for new loans or credit, and they may check your score more than once within a short period of time.

While it’s not common for someone to have multiple hard inquiries in a span of fewer than 30 days, it does happen from time to time and can affect your credit score.

Factors such as waiting for the last minute to pay bills or changes in your credit mix can cause your credit score to go down without any reason.

Below are some less obvious reasons your credit score may go down.

1. Credit Limit Decrease

Credit card companies can sometimes lower your credit limit without you knowing. This can appear as having a higher balance on your credit report, even though you haven’t used any more of the available credit.

2. Inactivity on a Credit Card or Loan

If you have a large amount of debt and aren’t able to pay it off in full each month, lenders can reduce your available credit. To them, this means that your financial situation is a risk that they’re not willing to take.

3. Unpaid Collections

Unpaid collections can cause your credit score to drop dramatically because it shows lenders that you may have a history of avoiding paying the bills. It’s also a sign that you haven’t been willing to work with a creditor or collection agency in an effort to repay what you owe.

4. Closing Accounts

It’s possible to lower your credit score by closing accounts, whether it be because you’re consolidating debts or you simply don’t want to use that card anymore. When opening new lines of credit, lenders look at how much you owe across all of your available debt. If you close an account with a balance on it, it could raise your debt-to-credit ratio.

5. Too Much Credit

Having more available credit than you need can make it look as if you’re a riskier borrower to lenders. If you have a large amount of available credit that isn’t currently being used, it’s important to reduce the limits on those accounts to lower your debt-to-credit ratio. Closing accounts is also an option, but lenders might see that as a negative sign of your willingness to work with them.

Conclusion

While it’s possible for your credit score to go up or down for no reason, it’s usually something subtle that caused it to change. The information that lenders have on file and the way it’s used to calculate your credit score can sometimes affect you without showing any obvious cause.

If you’re concerned about your credit score, it’s always best to go straight to the source and request a free copy of your credit report. By doing so, you’ll be able to see if there are any inaccuracies that need to be fixed before lenders see them too.