5 Things that can Destroy Your Credit Rating

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.

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Maxing Out

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.

Paying Late

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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Vichaya Kiatying-Angsulee – FreeDigitalPhotos.Net

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5 Money Mistakes That Can Affect Your Credit Rating

Most people are aware that credit ratings exist. When you apply for a loan, or a credit card, or really any form of finance, the lending organisation checks your credit rating. They do this in order to assess whether you’re a good risk, or a bad risk, for a money lending agreement. Did you know though, that it takes very little to affect your credit rating? Some money mistakes are so minor you wouldn’t think they matter but when it comes to assessing whether you’re a good risk or a bad one, you’ll find all your money mistakes suddenly come under the microscope.


Avoiding Debt

While it may sound counter-intuitive to say that having no debt makes you a bad risk for lending institutions, it is actually the case. Without any credit history at all, you can’t prove you can handle repayments and manage your debt well. This will negatively affect your credit rating. Banks are very risk adverse – if they can’t see evidence you can pay back money, they err on the side of ‘No’.

Keeping Out Of It

Staying out of your own financial information is a pretty big risk. Around 80% of credit reports contain errors. If you don’t check your credit score regularly, you may be unaware of the information it contains. You may be rejected for loans based on false information and the more knock backs you get, the worse your credit rating becomes.

Taking It to the Limit

This one’s probably obvious; making a habit of using your credit cards to the max does not do good things for your credit rating. It’s a red flag to lending institutions that you are not good with managing your money. If you are struggling with debt, remember that you can always use the help of experts such as Debt Rescue. Let them steer you in the right direction.

Late Payments

When it comes to repayments, deadlines are more important than you think. Sure, your credit card company makes more out of late fees and you always pay the money in the end, but did you know that late payments are always recorded on your credit report? Even one day’s delay in making your repayments can knock a few points off your credit score.

Unfulfilled Loans

Applying for credit you don’t actually take up makes a negative impression on creditors. If you have lists of applications you’ve made for credit products on your financial profile, you will appear as a greater risk to lenders than you really are. Consider any application for credit carefully before you proceed with the paperwork. Also think carefully about those big ticket items like new laptops; any application for finance will require a credit report, and the more credit checks on your record, the less attractive you are to a lender.

What’s the biggest money mistake you’ve ever made? Share your wisdom in the comments box below.

Image credit:
Stuart Miles – FreeDigitalPhotos.net

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