If you are seeing a low credit score on your credit report. Then, you need to avoid the things that negatively affect your credit score. But, our specialists at BEC Credit Services have identified what brings down your credit score. If you are able to avoid these major mistakes then definitely your credit score will remain stable.
BEC Credit Services provides credit repair services. We at BEC Credit, help you improve your credit score on your credit report. We have a team of specialists that analyze your report. After analyzing your report, if any errors found, we help dispute your case to get those errors omitted from your credit report. In other words, we guide you on how to increase your credit score and get you back on track by improving your credit history. Get your credit report analyzed now!
A credit report carries the borrowing or lending history of an individual. Along with this, the report carries information about your identity, existing credit, public record, and inquiries.
It includes your name, D.O.B, residing address, social security number, and employment detail if any.
This includes your credit card history and information regarding mortgages and loans. Furthermore, it includes your payment history and how much you owe to others.
This includes a history of court judgments if any are against you. For example, if you have filed for bankruptcy or not.
It includes a list of companies that have requested access to your credit history or credit report.
A credit score represents the creditworthiness of an individual. Whereas, credit scoring is a process to analyze a lender's credit report information to help him make better credit decisions. In the past, lenders reviewed the credit reports and patterns of repayment manually. But, as time has passed, technology has evolved the business industry. The ripple effect was also on the financial industry. Thus, the process of credit scoring has evolved as well. Now, credit scoring works the same but it's more computerized. The computerized analysis takes every factor into consideration related to your credit history. Thus, avoiding the chance of denial on a single aspect.
Adding to the above, the credit score provides a clearer picture of your credit history through effective analysis. Despite the computerized process, there is still a chance of an error. This is where credit repair services come to rescue you. As a team of specialists deeply analyze your credit history and help you repair it. Credit repair services now!
The credit scores matter a lot and the credit score number is extremely valuable in your life. The reason it is matters a lot is because the higher the credit score the better for you. This means, you successfully fulfill your financial obligations. In other words, you will be able to have a loan at better interest rates.
Experian, Equifax, and TransUnion are the main three credit bureaus that measure your credit score. Whereas, FICO is the most common scoring system as it has been in use for more than 30 years. Moreover, the score ranges from 300 to 850, and each level is shown below.
There are several factors that determine your credit score. These factors include payment history, credit utilization, and credit history. To elaborate more, all details about late or timely payments, how much debt you still owe, or if any lawsuits filed against you or not. Moreover, details about your credit account opening and its use along with information regarding credit cards, loans, inquires, and much more.
Now let’s talk about what you actually need to do to avoid decreasing your credit score. There are a number of factors that can cause to drop your credit score to drop. These factors are discussed below.
Your credit score improves when you take a loan and payback that loan within due time. However, you need to be careful if you are taking up too many loans and applying for new credit cards in a short time. Such activities can result in a hard pull.
What does hard pull mean? It is a type of credit inquiry where the lender may check your creditworthiness. Whereas, a hard pull can slightly drop your credit score by 5 points or less. Furthermore, a hardy inquiry may remain on your credit report for about two years.
While a soft pull doesn't affect your actual credit score. Your employers can access your credit report to check if you are not a risk to the company. Even if you're renting a place then, your landlord can access your credit report to check how well you manage your obligatory payments.
Late payments have a strong impact on your credit score. As late payments can significantly decrease your credit score. For instance, late payment by 30 days can bring your credit score down by 39 points. Whereas, if you miss a payment by 90 days then your credit score goes down by 49 points. Therefore, ensure that you make payments on time.
35% of your credit score is based upon credit history. In case, there is a chance of delayed payment. Then, we advise that you negotiate with your lender. So that you can continue making regular payments to improve your credit score. A balance transfer to a lower-interest card can help you pay off debt more quickly. But you need to be aware of certain factors before transferring the balance i.e., fees, interest rates, etc. Improve your credit score by taking the services of our advisors.
Delinquency means failure to pay the debt and lowers your score. However, a loan default means that when a borrower regularly fails to repay his debts i.e., longer than 90 days. This has a serious impact on your credit score as you have to face much bigger consequences for defaults.
Default loans remain for about six years on your credit report. It can also cease you from getting more loans. It might be treated as a charge off. In a charge off banks may remove your loan from their books but it can remain on your credit report for seven years. Furthermore, you still have to pay the debt unless you declare bankruptcy. While under the law of some states you may end up in jail.
If you have an unused credit card that remains in your desk drawer. Then, it will also lower your score. How? Because lenders cannot access any meaningful information from it. Only sign up for credit cards when you are sure to utilize them.
In addition, when you don’t use your credit card effectively, your credit limit is expected to drop. The reason behind this is that your credit utilization rate exceeds 30%. While financial experts recommend that you do not exceed the 10% utilization rate. Credit Bureaus are concerned with how well you manage your money rather than how much you spend. The general rule is that your credit card balance should not exceed one-third of your credit limit. Otherwise, it will show that you are highly dependent on your credit card.
Moreover, when you reach your credit limit and your credit card is maxed. Then, in such a case, you can drop 49 points in your credit score. Reaching the maximum limit of your credit card is a red flag for you because it shows to lenders that you are a liability. Secondly, it shows that you don’t have the ability to repay the debt.
Despite, the top 3 credit bureaus (Equifax, Experian, and TransUnion) give you credit report once a year. But it is very important to check your report more than once a year. Because there can be a case where a lender might have misinterpreted information. File a dispute.
Secondly, you need to check your credit report because cases of identity theft have become common in practice. Therefore, it is vital to check your credit reports or get them checked by a professional, ensuring all actions are accurate in the report. When you request your credit report. Then, you do not drop your actual credit score because it is considered a soft pull.
15% of your credit score depends upon the credit history that you hold. So, the biggest mistake that you can do after paying off a debt is to cancel your credit card. The longer your account remains active, the higher the credit age of your account and the better your credit score.
Another reason for not to close your credit card facility is that it will erase all the credit history of timely payment that should be part of your credit report. Thus, canceling credit cards is not recommended unless it's necessary.
In case, you have made such mistakes then there is still a way out. You can also improve your credit score. You only need to take the right steps right away. Get professional advice and services from credit specialists now!
