Recovering from a credit score drop

Surprised and disgruntled man looking at a computer screen and trying to figure out how to recover from a credit score drop.Image: Surprised and disgruntled man looking at a computer screen and trying to figure out how to recover from a credit score drop.
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Managing your finances isn’t easy. Sometimes life gets in the way, and you may find yourself missing a payment, paying off a collections account or even contemplating filing for bankruptcy.

You probably know your credit health will be affected as a result — while we can’t tell you how much your score will drop because everyone’s credit file is unique, we do have helpful insights to share on what may happen and how you might be able to recover. VantageScore Solutions — the people behind VantageScore — have shed some light on how long it can take for your VantageScore credit score to bounce back after a negative mark is placed on your credit report. Intrigued? Keep reading!

Minor events

Not all negative events are created equal. On the less harmful end of the spectrum are things like …

  • Obtaining new credit: Hard inquiries that are placed on your credit file when you apply for a new line of credit will usually cause your VantageScore to drop by a few points. Lenders might question if you’re able to handle more credit.
  • Closing an account: Saying goodbye to your oldest credit card can decrease your total available credit limit, causing your credit card utilization rate to jump and your average age of credit history to drop.
  • Maxing out a credit card: Using up all of your available credit isn’t ideal. It could indicate that you need to rely on your cards to get by, which suggests that you pose a more significant risk.

According to VantageScore Solutions, it will typically take around three months for your score to see a recovery after any of these events occur, though the precise amount of time obviously depends on your individual profile. One hard inquiry and an approved application later, the benefits from opening a new credit account could outweigh the initial drop in your score. A new account can generate positive activity if your creditor regularly reports that you maintain a low balance and pay your bills on time.

In the grand scheme of things, these events aren’t terribly major. You inevitably will consider opening a new card or applying for an auto loan. You might need to close a card because of an annual fee. As for maxing out your card, if you pay off the balance right away the next month and keep your usage low going forward, it could be viewed as a one-time necessity and not have lengthy effects on your credit health.

Late payments

Late payments can damage your credit score more than opening or closing a credit account. Missing a payment or defaulting on an account are likely to raise a red flag because credit scoring models try to predict the likelihood that you’ll repay debt. If the late payment is the first negative activity to be introduced to your report, your score could take a large hit because it’s the first piece of evidence that you might be a risk.

As a result, VantageScore Solutions reports it commonly takes more than a year for your VantageScore credit score to rebound from a missed payment or default, though the effects on your own score will depend on your individual credit profile and specific factors like which type of loan you missed a payment on. You should also be aware that late payments generally remain listed on your report for seven years. However, the more quickly you can bring your account back to current status and the more on-time payments you make following the missed payment, the more quickly your score will likely recover.


Declaring bankruptcy is a serious matter and treated as such when factored into your score. It could take your VantageScore credit score seven to 10 years to recover, which is also how long the bankruptcy record information may be kept on your credit report. While you wait for your bankruptcy to be removed from your credit report, make sure to practice good financial habits with your money. After several years, you may want to try applying for a secured credit card to carefully begin rebuilding your credit.

Bottom line

The silver lining is that in most cases, these marks won’t haunt your credit record forever, or even for as long as they remain on your report. The impact to your score might fade away over time. How much time just depends on the event and your resulting behavior. Work on exercising these four key financial habits — they apply to anyone and everyone, and they could help you rebuild.