A good credit score is nearly essential when it comes to buying a house, getting a car, or even being approved for certain loans. You’ll have an easier time renting and getting good cell phone coverage.
But what about when your score is low?
A bad credit score makes life harder overall. You lose all of the benefits of a good one, meaning you won’t be able to rent or buy with ease and you may have to pay extra fees on certain purchases.
What lowers your credit score anyway?
If you have any big purchases on the horizon, or you’re afraid to check your own credit score, keep reading to learn what might be working against you.
Overusing Your Credit Card
Did you know that you can overuse your credit card?
If you’re trying to build credit, it’s best to make small and manageable purchases that aren’t too tough to pay off later.
These can be things like weekly gas or groceries or even some light holiday shopping.
If you make very large purchases on credit, or you’re using it beyond about 30% of your credit card limit, you might lower your score.
If you need a large purchase that you don’t want to put on credit, and you’re still trying to build your credit up, consider a bad credit loan. Look here for more information.
Never Using Your Credit Card
Surprise, turns out not using your card at all can also hurt your credit score.
It can be scary having a credit card and knowing how easy it is for things to go wrong. Unfortunately, not using your credit card won’t help you.
Unused cards make it seem as though you don’t know how to spend responsibly and like you’re just trying to build credit without doing anything. A lender won’t see a piece of plastic in a purse and assume you’re a trustworthy spender.
Not Paying Bills on Time
Missing a bill for a few days here or there is normal. For those that don’t have auto-pay on, it can be as easy as forgetting what day it is.
If you’re racking up those unpaid or late bills, though, don’t expect to have a great credit score.
While medical bills and debt are usually exempt from this for a period of time, if that debt is sent to collections, it will still damage your credit score.
Owning Too Many Credit Cards
Owning too many credit cards makes you a risk to lenders.
It’s common to sign up for a lot of credit cards, especially if you do a lot of shopping. That credit card that was made especially for your favorite clothing store? That still counts. Have you been racking those up?
If you have all of those cards, even if you’re barely using them, lenders may be worried that one day you could end up in serious trouble.
What Lowers Your Credit Score? A Lot of Things!
If you’re wondering what lowers your credit score and you have an unexpectedly low score, always look it up. You might be doing something that you’re totally unaware of!
Having good credit is important for financial responsibility.
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Interesting related article: “What is your Credit History?”