How to Achieve Maximum Success with

Factors That Can Hurt Your Credit Score

Most people are not as financially literate as they would like to be. Most people are not even knowledgeable enough to pass their financial literacy tests. The aspect of financial literacy many people struggle with the most is their credit score. Most people lack the necessary knowledge on how to increase their credit score or the reason it falls in the first place. If you are one of them, you can read here to learn everything you need to know about. You can read on to learn more about how to raise your credit score and the most common reasons for its drop. There are a lot of reasons why your credit score may be dropping.

One of the most common reasons for a credit score drop is because of failure to make your payments on time or completely failing to make payments altogether. You may fail to make your credit card or loan payments as scheduled, or you fail to make the payments at all probably due to lack of money, but this will only reduce your credit rating.

Utilizing your credit more regularly could also be another reason for a credit drop. This is possible if you use your credit card way too often since it impacts your credit utilization killer. The ratio of the money you have loaded to your credit card and the amount of credit available to you is what is referred to as the credit utilization ratio. The most recommend credit utilization ratio should be below 30 percent. If it is not below this, you are advised to think about how you can lower your credit card spending or hold discussions with your partner.

If you have had too many credit card applications, it could lead to a credit score reduction. If you have applied for too many credit cards within a short time, a lender may be forced to pull your credit report to determine your qualification. you may end up loosing up to 5 points from your total credit score if you have a hard inquiry on your credit report. Many credit card applications also send a negative message to loaners and show that you are in desperate need for financial aid. If a lender thinks you are desperate, they will question your ability to pay your bills in time.

Unemployment is going to affect your credit score. Credit bureaus will not be notified when you lose your job, but they will notice a drop in your income. This could be even more damaging if I reduce your ability to make timely payments.

You can improve your credit score by setting reminders or signing up for automatic payments. Paying down your debts is an excellent way to improve your debt-to-credit ratio.

This entry was posted in Arts & Entertainment. Bookmark the permalink.