Why Did My Credit Score Drop?

If you’ve seen a change in your credit score recently, you may be wondering why. There are a number of factors that contribute to a dropping credit score and it is important to know what may be causing that! When buying a home, it is important to maintain your credit and not make any major purchases that could impact your score. Here are the top 5 reasons for a drop in credit:

YOU MADE A LATE PAYMENT

Accounting for about 30% of your total rating, your payment history has a big impact on your credit score. If you make a loan or credit card payment more than a month after the due date, it could cause your credit score to drop. A payment 60-90+ days late will have an even greater impact on your score.

YOU MADE A LARGE PURCHASE

Your credit utilization ratio can largely impact your credit score. Your ratio is how much of your credit you use in relation to your total available credit. The goal is to have a lower ratio so if you’ve been using more of your available credit lately, you may see a drop in your score. If for any reason your credit limit is lowered, it can impact your credit utilization ratio and impact your score.

AN ACCOUNT GOES TO COLLECTION

Timely payments on all accounts is an important part of your credit journey. Late payments on credit cards, loans, to medical facilities, student loans and utilities can be sent to a collection agency, which could in turn show up in your credit report.

YOU OPENED A NEW LINE OF CREDIT

When you apply for new credit, you are giving lenders the permission to access a copy of your credit report, which is known as a hard inquiry on your credit. If your credit report indicates that you’ve applied for multiple new credit lines in a short period of time, your credit score may be impacted.

YOU CLOSED A CREDIT LINE

Closing a card means losing available credit, which could increase your credit utilization ratio. As a result, your credit score may drop. If closing a card helps you stop spending, it may be a good idea. Otherwise, it is usually wise to keep lines of credit open. The length of time you’ve had accounts open shows that you have a solid payment history, so that could be another reason to keep that card you’ve had awhile open if you are using it wisely!

End Your Homebuying Journey On A Good Note

The homebuying experience can vary in length for everyone, but the ending should be smooth no matter how long (or short) it takes you to get to the finish line. Like with any process, there are some steps you can take to make the end much more seamless.

One of the first things you can do is to conduct a home inspection. These are typically performed after the seller accepts your offer to purchase their residence. At the time of inspection, a home inspector will perform a thorough walkthrough of the house and identify any potential problems. The home inspector then provides you with a report that details their findings.

To keep things moving smoothly, it is also important to be flexible. It would be great to be able to close on a home by a specific date of your own choosing, but sadly the homebuying process can be unpredictable with timelines. Delays can happen without notice and you need to be able to adjust your personal timeline accordingly.

The best way to make things move smoothly is to collaborate with a real estate agent. Navigating the homebuying journey is a process, and can require a great deal of work to get a house you love for a good price. By choosing to work with an agent, you can take a great deal of that weight off of your own shoulders. A real estate agent will do everything they can to make your homeownership dream come true and can help with the process they are trained to be experts of!

Finding The Right Home For You

If you’re a first time home buyer, the stress of choosing the perfect house for your family can feel overwhelming at first. While that stress may seem very real, it is often unnecessary. Instead of entering the market trying to find a house that is perfect in every way, keep an open mind. Approach the situation with a willingness to hear ideas and you are much more likely to find a home that you and your family will love. The process can be long and require work, but it will be worth it in the end - and it doesn’t have to drive you crazy. Here are some tips to guide you when you are trying to find potential new homes and how to know if it is the right one for you.

DECIDE ON DEAL BREAKERS

The easiest way to narrow down the right house for you is to start by deciding what you either can’t live without or cannot tolerate. If two bedrooms will never work for you, or you must have a large backyard for your pets, create a list of those things so that you can rule out properties that just aren’t worth your time. 

TRUST YOUR GUT

There may be times when you walk into a home and it seems like it may fit what you need, but there is just something off that you can’t shake. On that same note, if you tour a home and you instantly fall in love, don’t doubt your feelings. Sleeping on a house you love for too long can end up in you losing that home to someone else. Trust your instincts and you will end up in the home that is perfect for you.

TRY TO VISUALIZE

Can you see yourself in this home? Can you imagine your children playing in the backyard and doing homework in the kitchen? If you are touring a home and can already picture what it would be like for your family to live there, you are heading in the right direction.

KEEP LOCATION IN MIND

While a house may check most of your boxes, don’t forget to consider the neighborhood. Are things that are important to your family close by? Are you close enough to good schools or your place of employment? Make sure that you consider location factors so that you don’t end up in a home that becomes an inconvenience.

TRUST YOUR AGENT

While it is important to know what you want and trust your gut in the process, don’t forget that your agent has your best interest in mind. We want to find you the perfect home, and we have worked hard to do that for many others before you. We know the ins and outs of the real estate world, and are here to help you if you are willing to trust us!