8 Things that Hurt your Credit Score
Possessing a decent credit score brings a lot of benefits. All of the information about how you manage your debts is archived on your credit report. Your financial experience during several years is
what experts call your credit history. Your financial life is described through these reports, and they will be used as a reference in almost every financial transaction you make.
Credits scores are like first impressions for lenders, companies, banks, and any other financial institutions. So, to become an appealing candidate at first glance, we want you to understand these 8
things that hurt your credit score:
1. Delayed payments
Your payment history is perhaps the most critical element that affects your credit score. Being late on your credit card payments will definitely do some damage and not paying a bill at all is even
worse. Every time you miss your payment, your credit score takes a bullet hit.
2. Negative account status
Your debts may be sent to collectors when creditors or lenders give up trying to get the money that you owe to them, these are third parties whose business is to get money from borrowers who
haven’t been paying, and they charge lenders a commission to do so. That may happen before or after your account is charged off, which is another status that hurts your credit score.
These negative items affect your credit score severely, but the good news is that you can get rid of those by using the services of one of our sister companies, DeletionExpert.com
3. Closing credit cards
Closing your credit card is not always the right decision. If you still have a balance when you close your credit card, your credit limit and available credit are reported as $0, and it will look like
you’ve maxed out, which really hurts your credit score.
Having different types of credits is a great way to improve your score, so, if you close the only credit card you have, the only source of credit experience you have will be shut down with it.
Either way, if you really want to close a credit card, do it the right way. The best way to do so is to send a written notice to your card issuer or call to cancel it. Then make sure the card also appears
as closed on your credit report. By following these steps, you will ensure that your credit score is not significantly reduced by this action.
4. High credit card balance
It’s not just the absolute amount of money you owe to the lender that matters; it is also the proportion of such debt compared to the amount of available credit that can hurt your credit score. The
proportions in which you utilize your available credit matters, as a high level of utilization may mean that you are struggling financially or that you will be more inclined in the future to utilize this
high proportion of any new funds coming your way.
This is taken as a risk, as your debt can be exponentially increased if you get new loans, and that might cause repayment issues in the near future.
A balance utilization of 30% to 40% is considered optimal, but that also depends on your credit limits. Low credit limits and high utilization are not entirely bad, but mid to high credit limits and
high utilization are definitely a problem for your credit score.
5. Maxed out credit cards
Being maxed out means you are using your entire available credit or that you already crossed the line towards the negative available balance.
This is not a good scenario for your credit history, and it will also mean that you will have to pay financial charges for overusing your credit card. The best way to avoid being affected by this is to
quickly pay the excess, therefore reducing your debt to a more adequate size.
6. Loan defaults
Loan defaults affect your credit history substantially. They will quickly reduce your credit score (usually 30 days after the default has taken place) and they will considerably reduce the likelihood
of obtaining new lines of credit.
For lenders, one default is a warning signal that more may be coming; therefore, they will do whatever they can to protect themselves by demanding full payment of any other credit instrument
you have with them. It could create a snowball effect on your credit, therefore, avoid it as much and as long as you can.
Filing for bankruptcy will definitely ruin your credit score. it might improve your short-term quality of life as the letters and calls will stop, however, your self-image and future credit reputation
will be severely damaged.
Bankruptcy can remain on your credit history for ten years and it will cripple your access to new sources of funding for at least three years, even though your credit situation may improve during
If you are going through bankruptcy, the best thing you can do is to have patience and work on getting your credit report as clean as possible. You can also rely on the services of
DeletionExpert.com help you.
8. Getting a judgment
If your case gets to the court and they set a due date for your pending payments, you better honor it. A judgment means that you didn’t pay your bills timely, and a court of law had to step in to get
This is the last resort for lenders to get their money back and it is costly for them to be in that position. Therefore, this item is one of the most dangerous to have and you will drag around the
consequences of it for a while. It will increase your interest rates and it will almost get you out of the whole financial system (for borrowing purposes) if you don’t do something about it.
Any of the situations we have mentioned above will keep you from obtaining the funds you need for your projects. But fear not! We have your back on this!
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