Are you curious what might be impacting your credit score?
In this post Carrington Dean breakdown the 8 factors that could be causing a decrease in your credit rating! Keep in mind, though, that while these are common reasons for a low credit score, there are many other potential factors that could be having a negative impact on your credit score.
So if you’re not sure where to start when it comes to improving your credit score, be sure to check out the tips below
1. Get Rid Of Bad Debt
One of the best things you can do for your financial health is to get rid of bad debt. Bad debt is any debt that isn’t helping you improve your financial situation.
This can include high interest credit card debt, personal loans, and even some types of student loans. Getting rid of bad debt will improve your credit score and make it easier to get approved for loans in the future.
It will also free up more of your monthly income so that you can save money or invest in other areas of your life.
2. Make All Your Payments On Time
Paying your bills on time is one of the most important factors in determining your credit score. Payment history makes up 35% of your credit score, so it’s important to make sure that you’re always paying on time.
If you have trouble remembering to pay your bills, set up automatic payments so that you never have to worry about it again. You can also set up reminders in your phone or calendar so that you always know when a payment is due.
3. Keep Your Credit Card Balances Low
Credit card companies like to see that you’re using your credit card, but they don’t want you to max it out. credit utilization, which is the amount of credit you’re using compared to your credit limit, makes up 30% of your credit score.
So, it’s important to keep your credit card balances low in order to have a good credit score. A good rule of thumb is to keep your credit utilization below 30%.
4. Don’t Close Old Credit Cards
One mistake that people often make is closing old credit cards. This can actually hurt your credit score because it lowers your credit utilization and lengthens your credit history.
If you have an old credit card that you don’t use anymore, it’s better to leave it open and just cut up the physical card so that you’re not tempted to use it.
5. Use A Mix Of Credit Accounts
Lenders like to see that you can handle different types of credit accounts. This is why it’s important to have a mix of credit accounts, such as credit cards, mortgages, and personal loans.
Having a mix of credit accounts shows that you’re responsible with credit and that you can handle different types of debt. This can help to improve your credit score.
6. Don’t Apply For Too Many Credit Cards
Every time you apply for a credit card, it results in a hard inquiry on your credit report. Too many hard inquiries can hurt your credit score, so it’s important to only apply for credit cards when you really need them.
If you’re planning on applying for a mortgage or another type of loan in the near future, it’s best to wait until after you’ve been approved for the loan to apply for new credit cards.
7. Keep Your Oldest Credit Card Active
One of the things that lenders look at when they’re determining your credit score is the length of your credit history. The longer your credit history, the better.
So, it’s important to keep your oldest credit card active by using it occasionally and paying the balance in full each month. This will help to improve your credit score over time.
8. Check Your Credit Report For Errors
It’s important to check your credit report regularly for errors. If you find an error on your credit report, you can dispute it with the credit bureau and have it removed. This can help to improve your credit score.
These are the top 8 key factors that may be negatively affecting your credit score. If you’re not sure where you stand, it’s a good idea to check your credit report and credit score so that you can identify any areas where you need to improve.
Taking steps to improve your credit score will make it easier to get approved for loans and credit cards