If you have recently checked your credit rating, only to discover that you have a negative score, you may be feeling perplexed. You have never missed a payment before, so why is your rating so bad? There are actually numerous elements that are considered when determining a person’s credit rating. Yes, paying off your credit cards on time is the most important factor, but there are other vital areas to consider too. So, why is your credit rating so poor?
You don’t have a credit history – Not having a credit history is one of the main reasons why people have a negative credit score. This can be just s damaging as having a bad credit history. This is because lenders cannot tell whether you are credible or not if you have never borrowed money before. With that in mind, it is a good idea to take out your first credit card, and pay it off in full every month. This will help you to build up a good rating.
You have borrowed too much money – If you are in a considerable amount of debt, your rating isn’t going to be great, even if you do pay off your credit cards and loans every month. The best thing to do is get in touch with a credit repair company. You can find out more about this at: repair.credit/best-credit-repair-companies/. Such businesses will put a plan in place to help you boost your rating and get rid of your debt once and for all.
You have made too many credit card applications – A lot of people do not realise this, but the number of credit applications you make impacts your score, regardless of whether you go forward and take out a credit card or not. Therefore, you should never make an application without taking an eligibility test first to make sure you will be accepted. Soft searches will not impact your account. However, hard searches will, which is what an application entails.
Your details are not up to date – If your personal information is not up to date, this can impact your credit score because it makes it difficult for lenders to verify who you are.
The average age of your credit accounts is low – If the average age of your credit accounts is below 33 months, this will have a negative impact on your credit rating. Find out more about this at https://www.creditcards.com/credit-card-news/length-credit-history-fico-score.php. So, don’t go closing any of the accounts you have had open for many years, even if you don’t use them.
Hopefully, you now have a better understanding regarding the different elements that can impact your credit score. All hope is not lost, however. Now you know where you are going wrong, you can put the steps in place to put it right so that your score improves.