My credit score just dropped by 27 points! Learn what happened so you can avoid this simple credit score mistake (and how to increase your credit score if it happens to you)! Click “Show More” to see Ad Disclosure, links, and additional information below.

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I logged into my Credit Karma account and saw that my credit score decreased in a big way! Previously it was 808, and now at 781, that represented a drop of 27 points! In the video I explain what happened (hint: it had to do with my credit utilization, the second largest factor of your credit score), and what I plan to do in order to increase my credit score back to where it was originally.

Your credit score can be broken down into 5 main credit factors, each of which has a different weight on your credit score. I like to remember the factors via the acronym: PHURLEMINA.

PH = Payment History (35% of your credit score): This represents how many on-time payments you’ve made on your credit account. The more, the better.

UR = Utilization Ratio (30% of your credit score): This represents how much of your credit limit you’re using, both on individual credit cards and across all credit card accounts. At any moment in time, you can calculate your utilization ratio by adding up your credit balances and dividing that total by the sum of your credit lines. In other words: Current Balance ÷ Credit Limit. Multiply the result by 100 to put in into percentage form.

LE = Length of Credit History (15% of your credit score): This is also called Average Length of Credit History, taking into account your oldest credit card, newest credit card, and any others in between.

MI = Mix of Accounts (10% of your credit score): This represents the different types of financial products on your credit report, like credit cards, auto loans, installment loans, etc. Generally, the credit bureaus like to see you’re financially responsible with different types of products.

NA = New Accounts (10% of your credit score): This includes any new credit card accounts you’ve opened and credit inquiries (i.e. hard inquiries / hard pulls on your credit report).

A lot of changes to your credit score are temporary and are easy to fix. So, if you see a credit score drop, learn which factors were involved, then focus on those areas to make your rebound happen a lot faster!

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