Things That Are Giving You a Bad Credit Rating
Shopping during the holidays can be fun and therapeutic. But it’s easy to lose track of time—and your purchases—once you get into it.
But now that the holidays are over, you’re realizing the extent of the unnecessary purchases you made. What’s worse, you’ve almost maxed out your credit cards. This doesn’t bode well for your already ailing bank account.
A good credit score is essential for keeping our financial situation stable in the long-term. It can help you get the best interest rates on mortgages, student loans, insurance, etc.
But what causes someone to end up with a bad credit score, and how can you avoid ending up with a negative credit history?
Here are some mistakes you are making that are causing this:
Making Late Payments
Even if you miss one payment or make a late payment, it can affect your score. Your credit score accounts for at least 35% of your credit history. Late payments decrease your score and will result in markups.
If your credit history shows that you make late payments, the chances of future loan requests being rejected also increase. S you also won’t be able to purchase that car you’ve been eyeing.
Moreover, finding a good job becomes difficult as well, since a lot of employers will conduct background checks before hiring you.
Most lenders use FICO (Fair Isaac Corporation) scores to determine whether or not you qualify for a loan. FICO’s policies are strict; it analyzes your credit score using three major credit bureaus—Experian, Equifax, and TransUnion.
So if your payments are late and your FICO scores decrease, you’ll have a hard time purchasing things or getting another loan. A good score usually stands at 670 and above.
Defaulting On Payments
Not paying your credit card bills can affect your credit score badly. If you miss one payment, it’s unlikely that the credit card company will report your account as ‘delinquent.’
However, if you miss three or more payments, your account will be sold off to a debt collector. Debt collectors are quite aggressive when asking for payments. In addition, if the debt collector cancels more than $600 of the amount you owe, you will have to pay that amount through taxes.
But more than that, your credit card company can take legal action against you for missing your payments. If the court orders you to pay back the money, it will be through your wages. If you are jobless and cannot pay the money back, you will have to file for bankruptcy or your accounts will be frozen.
A Charge Off
When your credit card company believes that you won’t pay back the debt, they’ll charge off your account. We’ve mentioned this above; it’s when they sell your account to a debtor. This will leave you with a negative credit score that will be on your credit history for seven years.
What Can You Do About It?
Our experts at Oak Credit Repair can guide you regarding fast credit repair and what your options are. We also offer free consultations, but this is limited to a first-come-first-serve basis.
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