Things That Hurt Your Credit
You've probably heard all of the advice on how to repair your credit score by now. But how exactly did your credit rating get so low in the first place. If you are wondering what you did to destroy your credit, or if for some reason you just want to tank your score, here are some of the most common causes of a bad credit rating.
- Missing Payments: This is the big one. If you have bills to pay, or debts owed, and you miss out on your payments, it will definitely impact your credit rating. Credit rating is used to determine if you can be trusted to repay your loans, and not being able to pay your current bills is a bad sign. If you want a bad credit score, simply don't pay anything you owe. We've all been there when we just forget something is due and miss a payment. When it becomes an issue is if this action is repeated over and over again. If you find yourself missing a lot of payments, there is usually a bigger root cause than just simple forgetfulness. If you need help managing your money, there are resources online or in person you contact to help you get everything under control. Nip this problem in the bud before it becomes a bigger issue.
- Maxing Out Your Credit Limits - Don't spend too much. If you are using all of the credit available to you, it suggests poor spending habits and begs the question if you will be able to pay it back. On credit cards for example, try not to spend more than 70 percent of your limit. If you can, keep it down to around 30 percent to be even safer. If you are constantly spending more than you should, it will harm your credit rating in the long run.
- Sticking To Only Credit Cards - Creditors want to see that you can handle multiple types of loans. If all you have is a single credit card, it won't do much to help your credit score. If you don't want to build up any credit, then simply stick to just one or two credit cards and don't get any other types of credit.
- Closing Credit Cards - While having too many credit cards can certainly harm your credit rating, closing them all down isn't the solution. You want to keep the ones you've had the longest as this shows responsibility. Simply closing out all of your cards is not the way to go if you want a better credit rating. Doing this will certainly harm your score.
- Too Many Applications - Lastly, your credit score takes a hit if you apply too often for credit. Every time you apply for credit, the company you are applying to will check your credit history with what is known as a credit inquiry. These inquires get marked down, and having too many on your file is detrimental. Only apply for one credit at a time, and wait some time in between if you are rejected. Having too many inquires on your record shows that other places turned you down, that you are possibly borrowing too much money, or that you don't really know what you are doing.
What creditors are looking for when they check your credit is that they can trust you to repay the loan. If you want a bad credit rating, just be irresponsible with your money. Spend too much, don't pay it back on time, and try to get credit from everywhere you can. If on the other hand you don't want bad credit, try to avoid doing these things as much as possible.