For example, a 25 point drop in their score might be a material change, or 50...that's for you to decide, or perhaps 2 or more 30-day lates on the bureau within the past 180 days (but be careful.....what if the creditor reported the borrower late in error, so we didn't use that as a measure), or maybe if they have 2 or more 30-day lates with your institution within the past 180 days.
These are not material changes in the borrower's financial condition. These are changes in how they are handling their existing debt, which is a factor you can use to establish reasonable belief the borrower cannot fulfill their obligations to you.
However, if you read the Commentary to 226.5b(f)(3)(vi)(7) you will see that there are two condition that have to be met.
IMO you have only met one of those conditions, the reasonable belief. You have not documented there has been a material change in the financial condition such as a significant reduction in income. The drop of a credit score does not show a material change.
In 2005 within a 60 day period I bought a new truck and new boat. Do you not think that dropped my credit score, but with the money I had as a down payment my financial condition was not materially affected.