Why your credit score could drop during the COVID-19 pandemic without you making any mistakes

The COVID-19 pandemic is making it hard for many people to pay their bills, which can hurt their credit scores. But there's another reason your score may have fallen recently.

Some ABC11 viewers reported seeing a drop in their credit scores, even though they made all their payments on time.

One ABC11 viewer learned her credit score dropped 25 points because her credit limit was cut in half by her credit card company. She did not do anything wrong, but during the pandemic, many credit card companies have cut limits on customer accounts to reduce their liability.

"Issuers are allowed to decrease customers credit limits without necessarily notifying customers and certainly without customers permission," said Jill Gonzalez from WalletHub.

Gonzalez explains when your credit limit is cut, it effects your credit utilization, which is the ratio of your outstanding credit card balances to your credit card limits. It measures the available credit you are using.

"Even if you are paying your bills on time, you might be using up more now your lesser credit limit which affects your credit utilization ratio and that is this magic number which also impacts your score around 15 to 20 percent depending on what score you're looking at," Gonzalez added.

It is always best to keep an eye on your credit utilization ratio, as it will help you better understand your fluctuating credit score. If you have a good history of paying your bills on time and making at least the minimum payment, you can call your credit card company to see if they will increase your credit limit.

Here are some Troubleshooter Takeaway to remember when it comes to keeping a good credit score.

• Make sure you pay your bills on time especially your credit card bills.
• Don't overuse your credit cards only spend what you can afford to pay back.
• Pay your credit card bills in full or the minimum payment due on time.
• Don't close your credit card accounts, this can decrease your credit score.
• Report any unfamiliar credit card accounts, loans, and bills to the credit bureaus.