Whether you’re in Irvine, Laguna Niguel, or anywhere in Orange County, your credit score matters. Your credit score determines your history with money, which allows future lenders and landlords to gauge whether they can trust you with expenses and paying them on time. But if you aren’t forgetting to pay your bills on time and in full, why might your credit score still be low? Here are some things that affect your credit score that you may be overlooking.
Overusing Your Credit
Having trouble with controlling your finances may be a reason why your credit score is low. Even when you’re on top of your payments, you may be using your credit a little too much and this can harm your credit score more than you think. This may mean that if you had $2,000 as a line of credit, you are using $1,999 of it every month, which will cause you to earn a black mark on your credit score even if you pay it off before your bill is due. If possible, try to keep balances low on your lines of credit. You can keep track of how much of your credit you are using by calculating credit utilization rates, which is how much you currently owe divided by your credit limit.
Not Using Your Credit At All
You may think that not using your credit at all can keep your credit score healthy, but it can actually negatively impact your score. Not having a credit history may be equivalent to having a bad credit history in the eyes of lenders and landlords. Without a credit history, there isn’t a record to show whether you are able to use credit responsibly and maintain good balances or make payments on time. Not using your credit can also result in the bank closing your account, which can negatively impact your score.
Forgetting Past Overdue Payments
Small fragments of unpaid bills and fees greatly contribute to why you might have a poor credit score. Unpaid bills from a variety of sources can cause your credit score to sink if they are unresolved. To keep track of all your payments and make sure there aren’t any issues that slipped, sign up to receive a free credit report each year from credit-reporting agencies such as Experian, TransUnion, and Equifax.
If you want to secure a home or be able to borrow money in the future, be careful of any credit score pitfalls that can hurt your score. Discovering that you have a low credit score is not the end of the world because there are many approaches to fixing your credit score and all it takes is time. If you have any questions about your finances or need any help with fixing your credit score, get in touch with us today!
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Courtesy of Cuselleration