Credit score is one of the most important things as it determines the creditworthiness of an individual in the money market. It is the main factor on which your loan approval as well as interest rate is decided. That is why, it is important for you to have a perfect credit score so you can take the loan at low rate and save your large amount of money.
1. Late/Missed Payments:-
35% of your credit score is determined on your payment history. Making one late payment will not ruin your credit score, but consistent late payments will surely hurt your rating in a bad manner. Completely ignoring your payments will hurt your rating in a much worse way than paying late. In addition, to hurting your credit history it will bring number of penalties that will put a financial burden on you. Some lenders can also jack up the interest charges after few occurrences of late or missed payment that will bring big financial problem in your life.
2. Large Owed Amount:-
30% of your credit rating is decided on the amount you owed. It is another important component that can be the main reason for drop in your credit score if your credit suddenly rises because you didn’t pay your bills. The unpaid balances of your credit card can be the big reason for this harm. It will not only decrease your credit score, but also put you in problem to pay your all debts. Being in the burden of number of debts can ruin anyone’s life. And, the damage in your credit rating can become the main reason for reducing your credit limit or even refusal of any more credit from the financial institute.
3. Too Many Requests For Loan:-
When credit bureau receives too many queries about the person in the shortest time frame than it automatically drops their credit score. This is because, credit agency get the inquiry when an individual makes too many requests for loan. This drop in credit score decreases your chances to get the loan amount. Because lenders also see this reason of low credit and consider you as a risky borrower and simply denies your loan application. This also creates the problem for the people who need money, but couldn’t get it due to this downfall.
The Bottom Line
These are some of the main factors that not only harm your credit score, but create various problems for you. Do keep in mind that credit score plays major role in getting loan approval with best available interest rate. It will also help you in getting job, house on rent and even cell phone. So try to avoid these factors and manage your score responsibly to get the problem free financial life and shining credit rating.
