There are several possible reasons why your dog might have crusty scabs on their skin. Your dog may be allergic to something in their environment, such as pollen or certain types of food, which can cause them to develop skin irritations and scabs. Fleas, ticks, and other parasites can cause skin irritation and scabbing. You may also notice your dog scratching, biting, or licking at the affected areas. Bacterial or fungal infections can cause scabs to form on your dog's skin. In some cases, the scabs may be accompanied by a foul odor. If your dog has been injured, such as from scratching or biting, scabs may form as a natural part of the healing process. Hormonal imbalances, such as those caused by an underactive thyroid gland (hypothyroidism), can lead to skin problems and scabbing.