Reasons That May Affect Your Credit Score

You need to have a good credit score so that it helps you to maintain a financial status in your life. A credit score is one of the deciding factors for the bank to offer you a credit or a loan. Depending on the credit score certain service providers may change the rate of interest or ask for a security deposit. It is possible for dismissing credit inquiries on your report by the banks. There was a blog published on the importance of credit score in the website.

It is important that you know the reasons that may boost your credit score. It is also good to be aware of things which affect your credit score. The article discusses in detail the various reasons that may hurt your credit score.

Paying Late

Your credit score gets affected when you pay your debts late. The credit score is mainly based on your payment history. Pay your credit card bills before the specified period, or else it may have a huge impact on your credit score.

Not Paying

This is a great threat to your credit report. When you do not pay your credit card bills regularly then, this might affect your credit score badly. You may also be charged off for not paying your bills.

Account Charged Off

Continuous episodes of ignoring the credit card bills can lead to charging off your account. This is one of the worst scenarios that may hurt your credit score. It is better that you pay the minimum each month so that you can avoid your account being charged off.

Loan Defaulting

This situation is similar to account charging. This is because you might not have fulfilled your monthly loan contract.


This may affect your credit score badly. This involves discharging your liquid assets to pay your loan. You need to look for alternatives before filing bankruptcy.

Credit Card Balance

It is important that you maintain credit card balance as low as possible. High credit card balance can affect your credit score. Credit card balance is used to measure the level of debt through credit utilisation. High credit utilisation decreases your credit score.

Closing Credit Cards

You need to be very careful when closing credit cards. Check if the card holds a balance before closing it. Closing it with the balance may drop your credit limit to $0.Closing it with a balance can devastate your credit score. It is better that you close your card when you do not have any balance to be paid.

Applying For Several Loans

The act of applying for loans and credit cards in regular interval may affect your credit score to a greater level. Nearly 10 percent of the credit score is based on the credit inquiries you make. Too much of inquiries on taking up a new loan is an indication that you’re in a severe financial trouble. It is seen that the recent enquiries may affect your credit score.

Having Only Credit Cards Or Loans

You need to diversify your credit. It is recommended that you do not have only credit cards or only loans. When you maintain a single credit account, then your credit score gets affected.

The above are the factors that may hurt your credit score.