Why your Credit Score may be Low

A high credit score is requisite for approval of loans with favorable interest rates. Lenders, insurance companies, and banks are quick to check one’s credit score before taking any financial step or risk, like money lending or loans.

What factors affect one’s credit score?

Payment history

One’s payment history is very important in either reducing or boosting one’s credit score. Payment history involves how promptly you paid your bills and money borrowed. A good payment history is one with bills paid on time, on or before the due date. All these are critically analyzed.

One can have a poor payment history when bills were paid too late beyond the due date.

Good payment history adds points to your credit score while a poor payment history will do just the opposite: deduction of points.

Payment history can involve how you paid back money borrowed, paid rental bills, mortgage, credit card bills, and the like. To have a good payment history, pay up bills on time, and don’t borrow beyond your means. There is no substitute.

Money owed

Do you currently owe some money? This is one factor that greatly affects one’s credit score. Points are deducted from the credit score proportionally to the amount owed by the individual. However, a good payment history might be able to act as counter for the deductions for money owed.

Recent credit application

As you apply for more credits, your credit score reduces according to the number of credits and the value of the credits.


Have you ever declared bankruptcy? Bankruptcy and other credit situations that demand the judgment of a court are all considered in your credit score. Bankruptcy, definitely, will deduct from your credit score.

Can you raise your credit score?


If you won’t live beyond your means, you will always have a good credit score. Don’t borrow money too big for you to comfortably pay. Watch out for the interest rates on the money you borrow. All these are factors that cause financial problems, leading to low credit scores.

Also, an act such as using up the balance in your credit card, and the like, can work negatively against your credit score. You have to be very particular about credit cards. Spend within the limits of the credit card, and always ensure they are not used up.

Finally, critically scrutinize very credit report sent to you. In situations where you sight an error, ensure you send a credit dispute letter immediately to dispute and correct the error. Error in a credit report is never favorable, and for that reason, it should be disputed and corrected, as it may affect your credit score negatively.