6 Top Factors that affect Credit Scores Negatively

Dec 04, 2022

There are many perks to having a good credit score. It lets you negotiate more effectively with lenders and gain their favor to get your desired loan. Your interest rate may even be lower. In contrast, a poor credit rating makes your loan application more likely to get rejected. Even if it’s approved, you could end up with high-interest rates. That’s why it’s crucial to deal with a low score and seek the right credit solutions to remedy the problem as soon as possible.


It’s also worth knowing what factors can negatively impact your credit score, so you can do something about them or try to avoid them. Here are six:


  1. A history of late or missed payments

A history of irresponsible credit repayments shows your inability to pay loans and deal with your debt. Credit scores damaged by late or missed payments can take years to repair.


  1. Using much of your credit limit

The ideal credit utilization ratio is 30 percent of your total credit amount, and better if it’s less. Borrowers who go beyond that are perceived as reliant on their credit, causing a lower score.


  1. Too much unpaid credit

Consumers seek credit solutions to fix their low scores caused by their inability to settle their payments on time and in full. This can affect their ability to secure a loan or get approved for a new credit card.


  1. Errors on your credit report

Your credit report details your credit history and repayment behavior based on information from financial institutions, lenders, and banks. Any issue, comment, or error can negatively impact your score.


  1. Lack or absence of credit mix

A low credit score can result from an inability to balance unsecured and secured loans.


  1. Hard inquiries from lenders

A lender may conduct hard inquiries when you apply for new credit or a loan, and these show your multiple attempts for approval over a specific time frame. The frequency of these inquiries can impact your score and significantly lower it.


Do you need to repair your score?

Find legitimate credit solutions that can repair and restore your score. They come from reputable and established companies that can work with you to manage your credit and prevent further mishaps.