Things that Hurt your Credit Rating

Many people in today’s instant gratification society are piling up credit card debt like there is no tomorrow. These people are constantly trying to find quick and easy ways to raise their credit rating score. This becomes a necessity when you have harmed your credit score through some glaringly obvious mistakes. The top ways to hurt your credit score include making late payments, paying only the minimum, maxing out a large number of credit cards, applying for many cards at one time, not having any credit, filing for bankruptcy, having items repossessed, cancelling old cards, and not making any payments at all.

If you want to know why your credit score is suffering, it may be because you are making late payments on your bills. A large portion of your credit score is determined by how many payments are more than thirty days late. These late payments can cost you untold money in the long term, as a low credit score can linger for seven years.

Some people tend to pay just the minimum balance owing, which is not a great way to improve your credit score. You are hurting your credit score by only making the minimum payments, because the interest charges keep adding more money to your debt, which brings down your overall spending power and raises your interest rates because you are a credit risk.

Maxing out a large number of credit cards is a great way to hurt your credit score. The more credit cards that you have that carry a poor utilization ratio, the worse off you are. The highest this number should be is about thirty percent, but if you are maxing out your debt to available credit ratios, you will find your credit score plummeting rather rapidly.

A person that applies for lots of different credit cards at the same time has a red flag of caution thrown up around their name. Applying for a large number of credit cards shows lenders that you are a credit risk, and are in some financially dire straits. In order to not hurt your credit score, do not apply for more than one credit card at a time.

If you have no credit at all, this actually works against your credit, since it is not known what type of credit card user you are. In an attempt to avoid hurting your credit score, you should find out everything you need to know about credit cards, and understand what to look for, and what to avoid.

Filing for bankruptcy is a way to paralyze your credit score. Filing for bankruptcy places a huge flag of warning against your name, and for years to follow you will have severe trouble securing any type of loan or credit. You will be such a risk that you may never be able to recover from it.

Having items repossessed is another fine way to hurt your credit score. Defaulting on a used car loan, or having your mortgage taken over by the bank are detriments to your rating. These things will haunt you for years to come, so they should be avoided if you do not want to hurt your credit score.

Never cancel old credit cards, or else your credit score will be hurt. Credit scores take into account the length of your credit history, so you should never rid yourself of any cards. Do not terminate the cards, simply shred them or lock them away.

Of course, if you do not make any payments at all, your credit score will travel downhill faster than a Jamaican bobsled team. Not making any payments whatsoever is a credit no-no, so your credit rating will hurt. This is one of the top ways to make yourself less desirable to lending institutions.

These are the types of behaviours to avoid, or else your credit score will be damaged. Once your credit score is lowered, it can take up to seven years to repair. This will come back to haunt you over and over again, and will ensure that you only ever receive the highest interest rates possible when applying for any type of loan or credit.