In 2022, the average U.S. credit score was 714, says Experian, one of the three major credit bureaus. That falls into the "good" range.
But you should know that no matter what credit score you're looking at now, a 100-point drop could be quite detrimental to your ability to borrow money. So it's best to take steps to avoid a drastic credit score plunge like that.
When your credit score nosedives
It may be possible for your credit score to drop by 100 points but still be in pretty good shape. Let's say you started out with a credit score of 840 and it recently fell to 740. That's still considered "very good" by Experian. So in theory, you may still be in a decent position to borrow money when you need to and snag a reasonably competitive rate on your next personal loan.
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But let's say you're starting out with the average credit score of 714. If your score drops by 100 points, it puts you at 614. That score is only considered "fair," which means you may not qualify for an attractive credit card offer with that type of score. And a 614 is also below the 620 it generally takes to qualify for a conventional mortgage.
Basically, the lower your credit score is, the harder it becomes to qualify for a new loan or credit card. And even if you do qualify, you might end up with a more expensive borrowing rate.
A lower credit score sends the message that you're a riskier borrower. And lenders might attempt to compensate for that risk by charging you more interest than they'd charge a borrower with a higher credit score.
How to prevent a large credit score drop
There are certain things you might do that cause your credit score to drop modestly, such as applying for a new loan or credit card, or racking up a larger balance on a credit card you already have. For your credit score to drop 100 points at once, you're most likely talking about being 90 days late or more on a loan or credit card payment you're on the hook for.
Believe it or not, a single late payment could cause damage in that ballpark, especially if your credit score is higher to begin with. So if you want to avoid a sudden 100-point credit score drop, make a point to pay all of your bills on time.
Of course, your credit score might also drop by 100 points over time, in smaller increments. But you can avoid having that happen by not applying for too many new loans or credit cards in short order and keeping your credit card balances low relative to your total spending limit. Hanging onto long-standing credit card accounts rather than closing them could also help prevent a drop in your credit score.
All told, a 100-point drop in your credit score may or may not hurt your chances of being able to borrow. But even if a decline that large still leaves you with a decent score, it's best to avoid a massive drop like that if you can.
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