My Credit Score Dropped from 676 to 520 Overnight: What Should I Do?

A Reddit poster had a credit score of 676, but his score dropped to 520 overnight. The poster said he did not know why the sudden and dramatic score drop happened, but that he “sometimes” pays his bill late. He’s not sure exactly what he should do next or how he should address the situation.

So, what should the poster do to rescue his credit?

How to deal with a sudden credit score drop

The first thing to do when your credit score drops suddenly is to try to figure out why. Credit scores can decline for a few key reasons, including:

• Late payments: A single late payment can drop your score by more than 100 points, especially if you had great credit before.
• Collections activities: Foreclosure, repossession, or a judgment against you can result in a dramatic drop in your credit score.
• Debt settlement or bankruptcy: If you settle your debt for less than the full balance you owe, or if you file for bankruptcy, this will do major damage to your credit record. 
• Maxing out your credit cards: You should ideally keep your credit utilization ratio to 30% or less of your available credit to avoid hurting your score. Exceeding this limit can do damage, while maxing out your cards or exceeding the limit will have a more noticeable impact on your score.  

You can get a copy of your credit report for free from AnnualCreditReport.com and look for negative information that was recently posted that could explain why your credit score dropped so much overnight.

Once you know the cause of the issue, you can take action. For example, if unexpected collections activities were posted because someone stole your identity, you can dispute the details.

If it was a late payment that you are responsible for, you have fewer options — but if you’ve generally been a good customer, you can contact your creditors and ask if they might be willing to remove the negative data if you make the payment in full. 

Avoiding damage to your credit score

A big credit score drop can have a major adverse impact on your finances, so it’s worth doing what you can to avoid it. 

One of the best ways you can do that is to set up automatic payments. This Redditor commented that they sometimes pay late. Once a payment is 30 or more days past due and is reported to the credit bureau, that can result in substantial damage to your credit history.

You should consider setting up autopayments for the full amount of your balance so you can avoid finance charges. If that’s not possible because you worry you’ll overdraft your account if you do, you should at least set up automatic payments for the minimum payment — and then try to manually pay off as much as you can each month before interest starts accruing.

Beyond automatic payments, it’s also important to live on a budget so you avoid charging too much on your credit cards and coming close to maxing them out. A financial advisor can help you get your finances under control so you aren’t spending so much that you run up a balance you can’t repay. 

If you follow these tips, hopefully you can help protect your score. For this Redditor, though, and anyone else who experiences a big decline in their score, finding out the root cause and taking steps to address it is going to be your best bet to try to quickly fix the situation — if it a fix is possible.