Your credit score affects your ability to make many life decisions. One 3 digit number can affect your ability to buy a house, have your loans approved and your likelihood of receiving employment. If you happen to have a bad credit score, then the options available to you when making these life decisions are limited.
If you are someone who has a low score than your best option is to make the necessary adjustments to start building your score back up. However, before going on the journey to correct your score, you may want to reflect on your credit history and see why your score currently sits where it does.
10 Reasons You Might Have a Bad Credit Score
Overdue Payments
A credit score is the number lenders use to determine whether to lend to you or not. So it goes without saying that having overdue payments could be the reason your credit score is lower than you would like.
Not Making Payments
This is the only thing worse than having late payments. Not making payments on what you owe will lower your credit score without question.
Not Paying Off Loans
Similar to the reason above, this will show credit agencies that you are a risk and will lower your score. It will also prevent you from acquiring loans in the future.
Little or No Credit History
Having little to no credit history could be seen as a negative. If you aren’t making repayments (loans, credit cards, mobile phone contracts, etc. ), then you are not building a credit history. This makes it harder for agencies to make judgements about you which can lead to a lower score.
Not Registered on the Electoral Roll
Creditors use this address to confirm you are who you say you are. Not providing this information is why you may be turned down for credit.
Financially Connected to Others
If you have a previous financial connection to another individual, such as a joint bank account, then their bad credit could be pulling yours down. It may also continue to do so as long as the connections exist.
A High Utilisation Rate
AKA your debit-to-limit-ratio. Your utilisation rate is a comparison of your total balances to your total credit limits, shown as a percentage. If you want to calculate it, add up all of your credit card balances and all of your total credit limits and divide the total balance by the total limit. If you have a high rate it means you are overusing your credit, which could make it look like you are at risk to default a payment.
Foreclosure
Foreclosure will show lenders that you can’t keep up with your payments. Like other evidence of missed payments, this will lower your credit score.
County Court Judgements
This means the court system had to force you to pay your debts. Creditors will look at this as a sign that you are risky.
Not Checking Credit Report and Score
By not checking your credit report and score you are missing numerous opportunities to tackle problems with your credit the second they arise.
The last item is also the first step to tackling the issues bringing down your credit. At ScoresMatter we give you access to your report and score so you can monitor your credit for any of the issues mentioned above.
It is the most proactive solution if you are looking to get your credit back on track and dispose of any issues holding you back.
Tap Into the Digital You at ScoresMatter, today.