5 Things That Affect Your Credit Score Badly | Personal Finance Views

Wednesday, January 10, 2018

5 Things That Affect Your Credit Score Badly

Your credit score is a number that shows your credit worthiness. The higher your credit score is, the better it is for you. This is because you get credit when you want and also more savable rates. So it’s very important to maintain a good credit score.

However there are certain things that may affect your credit score badly. Some of them are as follows:

1. Not paying on time or missing payments

Your payments form 35% of your credit score. If you are always late in making payments or sometimes don’t pay at all then your credit score gets affected adversely.

Credit Score

2. Having small, unpaid debts

If you have any small unpaid debts such as parking tickets, etc, they may come back to haunt you. After you haven’t paid for sometime, your unpaid debts are turned over to collection agencies. The appearance of a collection agency record on your credit report has a very negative impact on your credit score.

3. Having charged off accounts

Your account is charged off when your creditors think that you will not pay an amount. Thus having a charged off account on your credit report means that you were not able to pay it on time. Thus, having a charged off account hampers your credit score significantly.

4. Having too many credit inquires

If you are making many credit or loan applications, a lot of credit report inquiries will appear on your credit report. High number of credit card inquires may suggest that your financial situation is not good. Thus, having a high number of credit card inquires also affects your credit score adversely.

5. Filling for bankruptcy

Bankruptcy has a devastating effect on your credit score and this effect lasts for a very long period of time. You should thus, consider other debt solutions before filing for bankruptcy.

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