Things That Hurt Your Credit Score
A credit score is a value associated with a person’s financial status which estimates the probability of him/her to return the sum borrowed by taking various factors like previous repayment history or the amount of debt into account.
8 Common Habits That Damage Your Credit Score:
Having More Debt
Having more debt than you can repay every month hurts your credit score. When banks and other financial institutions run a credit check on your profile, your current debts and your repayment history are what catch their eye first. Despite what many people think, your payday loan in Las Vegas with no credit check does not your credit score.
Failure to Make Minimum Due Payments
Failure to pay your minimum due once does not have a significant effect on your credit score but if you fail to pay your minimum dues regularly, then eventually your profile would be marked as past due, which would damage your credit score. In addition to damaging your credit score, late payment or denial of minimum due payment results in late payment charges and additional interest rates as a penalty.
Delayed Payment of Bills
Late fees are costly if you pay your bills late. Set up rules facilitating automatic debiting the amount from your bank account, not having a sufficient balance in your bank account when the amount is due would result in a severe decrease of your credit score.
Applying for Multiple Loans Back-To-Back
In some situations, you might consider applying for multiple loans in different sectors, like a home loan or car loan. While this may be necessary for your position, this would mean there would be multiple access requests from various banks to view your profile. Every time a bank requests to see your profile, your score dips by a particular value. When multiple loans are applied one after another, it would inevitably cause a decrease in your credit score.
Owning Multiple Credit Cards
Getting multiple credit cards is easy since almost always your inbox would have at least one mail from a credit card company promising lucrative deals and discounts but it isn’t healthy for your credit report. Firstly, creditors would hesitate to approve your loan applications fearing your ability to repay if you chose to use up your available credit limits on all your credit cards. Secondly, multiple access requests to your credit report by the creditors would cause a dip in your credit score.
Failure to Update User Details
Failing to update your details in your credit reports is bound to cause a problem at some point in time. Whether you changed your address or name, it is essential for you to keep all your details up to date in order to avoid any issues or confusion later. Wrong details not only spoil your chances of getting a loan in your time of need, it also casts a doubt on your ability to honestly repay all your debts. One of the valuable tips for improving credit card score is to maintain a small balance on credit cards.
Closing Credit Cards
Closing credit cards by clearing your remaining debts might provide you some peace of mind but it does not do much good for improving your credit score. On the contrary, it plays a significant role in decreasing your score. Closing a card also means that you are vulnerable to financial emergencies and you may be asking yourself, “How do I find payday loans locations near me,” When you need some urgent money. Also, reducing the credit available to you increases your debt to credit ratio. Both of which affects your credit score.
Failure to Check Accuracy of Your Credit Report
It is essential for you to test the accuracy of your credit report before you apply for a loan or a new credit card. Not having accurate information on your report would result in your application getting rejected. Upon rejection, the probability of you applying to other banks to get your loan approved is high. But wrong information can result in your applications getting rejected repeatedly and such repeated attempts by multiple banks to run a check on your credit profile has an unfavorable effect on your credit score.
Some tips for improving your credit score include repaying your bills on time, maintaining a long credit history and having sufficient but not too much credit available in your credit cards. Every step you take in your life has an effect on your financial status. At the very least try to analyze your credit reports once a year to avoid financial problems in your near future.