Your credit score might be a small number, but it makes serious impact on your financial life, if you don’t maintain it. It is important to keep your credit score healthy now than have it repaired later on. There are many things that can hurt your credit score. Here is a list of some of the actions, you must stay away to protect your credit score-
- Making late payments are the worst offences that can hurt your credit score. Your payment history covers 35% of your credit score. Consistently being late in your payments, will have serious impact on your credit score. So, to preserve your credit score, pay your credit bills on
time. - Not paying or neglecting your credit cards bills is much worse than paying less. Each month
you miss your payments, you are one month closer to having the account charged off. If you miss your payments by a few weeks and still manages to pay your bills up to date are going to fare better than those who have 90 days of late payments. - Having your account charged off by the creditors, when you don’t pay your credit card bills at all. This account status can make the worst affect on your credit score.
- Creditors often use third-party debt collectors to collect the money you owe to them. They might send your account to collections before or after charging it off. This will show that the creditor tried hard but failed and hired a collection agency to collect money from you.
- Defaulting on a loan is similar to credit card charge-off. A default depicts that you have not fulfilled your end of the loan contract.
- Filing bankruptcy will seriously damage your credit score. Seek to alternatives, like credit counselling, before filing bankruptcy.
- Lagging behind on your mortgage payments will lead your creditor to foreclose on your home. This late payments will affect your credit score and it will become hard to get approval for future mortgage loans.
- A judgement against you shows that you not only neglected your bills, but the court had to get involved to make you pay the debt. Though a paid judgement is better than an unpaid one,both hurts your credit score.
- Your level of debt which is measured by credit utilization is another important part of your credit score. Having high credit card balances as compared to your credit limit increases your credit utilization and decreases your credit score.
- Maxing out your credit cards makes your credit utilization 100%, which is least ideal for your credit score.
- Closing credit cards that still have balances drops your credit limit to $0 while your balances remain. This shows that you’ve maxed out your credit card, causing your score to drop.
- Closing your old credit cards makes your credit history seem shorter than it really is. Longer credit histories are better than shorter as 15% of your credit score is the length of your credit history.
- Applying for several credit cards or loans within a short period of time will cause your credit score to drop.
