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What Hurts Your Credit Score?

Your credit score is you lifeline if ever you want to sign up for a loan. Your credit score is a 3 digit number that is connected to you and your credit history. It can rise or fall depending on how you handle your credits.

It is a common knowledge that paying bills on time can raise your credit score of course. The same as not paying will lower it, obviously. But what else does? Have you ever wondered what makes your credit score fall even if you are paying monthly on time?

Here are some reasons why your credit score is falling, you might not be aware that you are doing these so take note.

You have a lot of credit cards

Some people think that as long as they pay the minimum monthly due, even if they have a lot of credit cards will raise their credit score. In reality, it lessens it. Every time you get a new credit card, your credit score drops down a significant amount, the only way to get it back is to pay for 6 months or more positively, meaning no late, no below the minimum and no excuses. If you manage to do that in 6 months, your credit score will return to how it was before or somewhere close.

Maxing out all your cards

Credit limits are there in order for you to be able to limit your spending, but if you max out your credit card and get another one just to max it out again, that is another story. Even if you pay more than the minimum amounts that are being asked for, your credit score will eventually suffer.

You will not be able to get a cash loan or even a car loan if they see that you have a lot of credit cards and that it is all maxed out. They will not be concerned whether you are able to pay the monthly dues on time for a long time already, the fact that they are all maxed out is a red flag for you and your credit score.

Not being able to pay the specified minimum amount

For all your debts, there are always a specified minimum amount that you have to pay in order to avoid interests. If for example, your minimum due is $300, you only have $250, you pay it to them and you expect to be exempted from interests and payments because you paid after all, then you are just wasting your time. It will still be recognized as a late payment, as long as you did not reach the minimum amount, it will not be considered as paid and it will just accumulate an interest rate.

 

Having a credit card can cause a headache to a lot of people, but if you practice proper discipline, you’ll be surprised at how convenient having your own card it.