One day, you felt the urge to check your credit score out of the blue and found out that it dropped from 524 to 0. To get such a big beat down on your score can be rather a cause for concern. A credit score of 0 also indicates that there is not enough information to build a credit rating since no credit has been reported. But if it was like 500s then something must have changed because the score is no longer showing up. The following might be some of the reasons such a drastic credit score drop may occur.
While so many people scan through their credit reports, they are bound to find errors.
They have cited that one of the reasons why a credit score can go down in an instance to 0 is if there are mistakes in the credit report. That means if the credit bureaus no longer have sufficient accurate information to compute a credit score for you, it just gives a score of ‘0’. The credit bureaus could have provided inaccurate information because they confused information from a person with the same name as yours, your accounts could have been reported wrong and closed, or there could be other aspects regarding your credit history that have been deleted or altered.
If the fault is with these agencies, then you should consider contacting the three credit reporting agencies, namely Experian, TransUnion, and Equifax. To verify this, you can request free copies of the reports from AnnualCreditReport.com to confirm if there are erroneous entries. Finally, appeal to the bureaus to challenge the items with the bureaus to bring the correct details back. This should help your credit score to rebuild the moment the errors are sorted out.
Creditor’s Obligations Discharged in the Recent Past
The other circumstance in which your credit score might drop to 0 immediately is that you have recently applied for Chapter 7 Bankruptcy. Whenever you have your debts being cleared through the process of bankruptcy, such accounts are likely to be shut and they will, in most cases, be deleted from your credit reports. If a bankruptcy erased almost all or all your credit accounts there could have been no sufficiently many remaining accounts with record activity to compute a score.
Depending on the case, it can take a few months after bankruptcy for some of your good records to be reflected on your credit report. Given no more problems will come to light, this freshly reported data will help to rebuild credit reports and increase a score from scratch. The only thing to note is that one doesn’t have to immediately start incurring new debts after bankruptcy because that is counterproductive in credit rebuilding.
Identity Theft Issues
However, should you fall victim to identity theft, it has a way of causing your credit score to disappear as well. Identity theft is a situation where an unauthorized person gains access to your information and proceeds to open accounts in his/her name within the credit reporting system. If you think someone has stolen your identity, they might have been doing things like opening credit cards in your name and racking up large amounts of credit that they allowed to go into delinquency and close the accounts off.
This can remove the legitimate information required to estimate the score in situations where the thief has closed or frozen all your actual credit accounts, in severe identity theft instances. If identity theft may be the cause of the problem, then it is important to act quickly by reporting the matter to the credit bureaus and placing fraud alerts and credit freezes. You also will require an identity theft report and show which accounts are fake when challenging data.
Not Enough Credit History
A credit score of 0 may also occur if one has failed to open enough credit accounts within a short while that can be rated. For example, if you are credit cardless, or you have no other credit accounts other than one that you paid off or closed within a short time, then the scoring models may not work due to lack of enough data.
If the 0 score problem is due to a thin file, then the solution may entail getting a new credit card or taking a debt. It would also be prudent to engage in an open account reporting activity at least once more to gradually build up the credit data again. The two actionable credit behaviors to avoid negative consequences are paying balances in full and on time and maintaining a low credit utilization ratio.
As you can see, a credit score does not plummet right to 0 in one day without something major happening in the background. This way, you will be able to find out what led to the deterioration of your credit score and try to fix any issues that may be present to improve the score once more. If one is keen, they will be in a good position to identify any changes in their reports. Since you are willing to dedicate your time, be patient, and avoid being overzealous, your credit score should improve.
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