Most people don’t think about their credit rating until they have to – and that’s usually when you find out you have a few black marks as far as money management goes. There are debt strategists, of which Positive Solutions Finance is only one such example, who can help you clean up your credit rating when it goes sour, but it’s better not to let it get to that point. You’re probably aware that every time you apply for finance in any form – a credit card, a car loan, even store credit or mobile phone contracts – the lender checks your credit rating, so it’s a good idea to keep your credit record clean. The best way to do that is by knowing what not to do. Here are five things that can destroy your credit rating.
You don’t have to know too much about finance to understand that regularly spending to the point where you are maxing out your credit cards is not a good idea. It tells potential lenders that you are not good at managing your debt, or your money. This affects your risk rating. If lenders see you as a high risk client, they will either turn down your application for finance, or offer you a very high interest rate on your loan.
If you think that making your credit card payment a day or two late is no big deal, think again. Every time you pay your bills late it knocks a few points off your credit score, so while you’ve probably just thought a late payment only costs you a couple of days’ additional interest, it does in fact cost you far more.
Having No Debt
Believe it or not, having no debt makes you more of a risk than someone who has a history of borrowing money and reliably paying it back. If you can’t demonstrate your ability to pay back borrowed money in a satisfactory scenario, a lender will err on the downside of risk and assume you can’t do it. This means they mark your rating lower again.
Never Checking Your Report
Around 80% of credit reports contain errors, so if you never check your credit information, you may remain unaware of the information it contains. Your applications for finance can be rejected as a result of inaccurate information contained on your credit report. Then not only is that information hurting your credit rating, but your credit score takes another hit every time you get turned down. The theory goes that if Financial Institution A doesn’t like your credit rating then neither will the next one and the next one, until you will find it harder and harder to get approved for any sort of finance at all.
Applications for Loans You Never Take Up
Before you apply for any credit contract, consider that just the act of applying goes on your record. If you don’t take up the offer, creditors will wonder why. You should also be aware that any finance application triggers a credit check. Every credit check is recorded and too many of these also make you a higher risk for a creditor.
It is possible to come back from a bad credit rating but it is far, far better not to sully it up in the first place. Make sure your credit rating is kept as clean as possible, and stay on top of the information contained in your credit report.
Have you ever been rejected for finance due to a black mark on your credit rating? Share your story in the comments box below.
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