FIVE COMMON CREDIT SCORE

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◦Credit score plays a very important role in your financial life.  When it comes to you availing a loan or credit card, your credit score plays a deciding factor. A credit score is a numerical representation of your creditworthiness. Credit score can make or break your financial future. A bad credit score will land you in deep trouble when it comes to getting a loan, rent or a credit card. It is important to have a good credit score.

◦ It so happens many times that your credit score would have dropped and you wouldn’t even know about it. There are several factors that can bring down your credit score or even cause severe damage to it without you being aware of it. Let’s explore the most common credit score killers.

Listed below are the most common factors that are likely to bring down your credit score:

1. Your credit history2. Maxing out on your credit card3. Late payments4. Cancelling credit cards5. Too many credit card applications

Your credit history◦Your credit history contributes to your credit score. Your credit history

constitutes for 35% of your credit score. All the negative entries on your credit history will reflect on your credit score thus damaging your credit score.

Maxing out on your credit card

◦Maxing out on your credit card is never a good thing and is one of the main contributor to your low credit score. If you have maxed out on your credit card it will go on your credit report and the credit score is calculated based on your credit score. It is advised to not max out on your credit cards in order to maintain a good credit score.

Late payments◦Late payments will knock off a lot of points from your credit score. Making

late credit card and loan payments is never a good thing and can cause serious damage to your credit score.

Cancelling credit cards◦Cancelling credit cards can have a huge impact on your credit score.

Cancelling credit cards is never a good thing but at times it is inevitable. Cancelling your credit card lowers your total credit limit and increases your utilization ratio. Hence it is important to not cancel your credit cards.

Too many credit card applications◦All your applications for credit cards will be recorded on your credit report.

Applying for too many credit cards in a short period of time can have a bad impact on your credit score as it will make you seem desperate to avail credit.

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