Why Did My Credit Score Drop? 11 Common Reasons and How to Recover (India, 2026)
You logged in to check your CIBIL score and the number is lower than last month. Before you panic, know this: a credit score moves every month as your bureaus (CIBIL, Experian, Equifax, CRIF High Mark) receive fresh data from lenders. A drop of a few points is normal noise. A drop of 30, 50 or 80 points usually has a specific, traceable cause — and most causes are fixable.
This guide walks through why your credit score dropped, how to confirm the exact reason from your report, and the realistic timeline to recover. If you want the bigger picture on what a healthy number looks like, our guide to reaching a 750+ CIBIL score pairs well with this one.
First, rule out timing and reporting lag
Lenders report to bureaus on a cycle, often monthly. So a payment you made on the 2nd may not reflect until the next reporting date. Likewise, a loan you closed can take a few weeks to show as "Closed". Before assuming something is wrong, pull a fresh report and check the "Date Reported" column against each account. Much of the time, a drop is just the system catching up to recent activity.
You're entitled to one free full bureau report per year directly from each bureau under RBI's framework. You can also see your score anytime on our free credit score tracker.
The 11 most common reasons your credit score dropped
| Reason | Typical impact | How fast it shows |
|---|---|---|
| Missed or late EMI / card payment | High | 1 reporting cycle |
| Credit card utilisation crossed ~30% | Medium–High | 1 cycle |
| New hard enquiries (loan/card applications) | Low–Medium | Immediately |
| Closed your oldest credit card | Low–Medium | 1–2 cycles |
| Loan settled (not closed) / written off | Very High | 1 cycle, lingers years |
| Higher total outstanding debt | Medium | 1 cycle |
| Reduced credit limit by issuer | Medium | 1 cycle |
| Default by a co-applicant / guarantor | High | 1 cycle |
| Bureau reporting error | Variable | Until disputed |
| Thin file after closing all loans | Low | Gradual |
| Identity theft / fraudulent account | Very High | 1 cycle |
1. A missed or late payment
Payment history is the single biggest factor — often cited as roughly a third or more of your score. Even one EMI or card bill paid after the due date can knock off a meaningful chunk. Paying only the minimum due on a card avoids a "late" mark but still lets interest and utilisation build.
2. Credit utilisation crept up
If your card balances are high relative to your total limit (a ratio above ~30% is the common rule of thumb), your score takes a hit even if you never miss a payment. A big festive-season spend in October can show up as a November drop.
3. Too many recent applications
Every time you formally apply for a loan or card, the lender runs a hard enquiry, and a cluster of these in a short window signals credit hunger. Checking your own score is a soft enquiry and never hurts it — so feel free to monitor often.
4. You closed an old card or loan
Closing your oldest account shortens your average credit age and can reduce your total available limit (pushing utilisation up). Both can nudge the score down even though you did nothing "wrong".
5. A settlement or write-off
This is the heavy hitter. A loan marked "Settled" (you paid less than owed) or "Written off" is a serious negative and can stay on your report for years. This is very different from a clean "Closed" status.
How to find your exact reason in 4 steps
- Pull your full report, not just the score — the report lists every account and enquiry.
- Scan for red flags: any account not marked "Closed"/"Current", any "DPD" (Days Past Due) value above 0, or a "Settled"/"Written-off" tag.
- Check the enquiry section for applications you don't recognise.
- Compare month-on-month: note which single account changed status or balance between your last two reports — that's almost always your culprit.
Found an error? Dispute it free
Bureau errors are common — a payment recorded as missed, a closed loan still showing open, or an account that isn't yours. You can raise a free dispute directly on the bureau's website (CIBIL, Experian, Equifax or CRIF). Under RBI's 2023 framework, bureaus must resolve disputes within a defined window, and there's a provision for compensation (₹100 per day) if a valid complaint isn't resolved in time. Keep screenshots and reference numbers.
If you spot an account you never opened, treat it as potential fraud: report it to the bureau and the lender immediately and consider freezing further applications.
How long does recovery take?
There's no overnight fix — be wary of anyone promising one for a fee. Realistic timelines:
- Utilisation drop: pay down balances and it can improve within 1–2 reporting cycles.
- A single late payment: the negative weight fades over several months of on-time payments.
- Settlement / write-off: the hardest to undo. If you can, negotiate to pay the full dues and get the status updated to "Closed" — recovery here is measured in quarters to years.
The fastest lever for most people is utilisation. Bringing card balances below 30% of the limit, then below 10%, often produces a visible bump faster than anything else.
A simple recovery checklist
- Automate every EMI and card minimum via auto-debit so you never miss a due date.
- Pay the full statement balance, not just the minimum, whenever possible.
- Keep utilisation under 30% — request a limit increase or spread spends across cards.
- Pause new applications for 6–12 months while the score recovers.
- Don't close your oldest card unless it carries a fee you can't justify.
- Check your report quarterly and dispute errors promptly.
A stronger score isn't just a number — it directly affects the interest you're offered. Borrowers with healthy profiles routinely see personal loan rates from around ~10.25% p.a. and upward, while a weak score can mean a higher rate or outright rejection, subject to each lender's policy. If a recent rejection is what dented your score, our breakdown of rejection reasons and fixes is worth a read. When you're ready to borrow, the EMI calculator helps you size a comfortable instalment first.
Frequently asked questions
Does checking my own credit score lower it? No. Viewing your own score — whether on a bureau site or a tracker like RupeeQuik's — is a "soft enquiry" and has zero impact. Only hard enquiries, triggered when a lender pulls your report after you apply for credit, can nudge the score down. Monitor as often as you like.
My score dropped but I never missed a payment — why? Several non-payment factors can pull it down: rising card utilisation after a big spend, a recent loan or card application (hard enquiry), an issuer cutting your credit limit, closing an old account, or a reporting error. Pull your full report and compare the last two months to spot which account changed.
How long does a missed EMI stay on my CIBIL report? Payment records, including late marks, generally remain visible on your report for several years, but their drag on your score lessens over time as you build a fresh streak of on-time payments. Serious negatives like a "Settled" or "Written-off" status linger far longer than a single late payment.
General information, not financial advice. Confirm current terms with the lender.
