Short Term Loans

6 Things That Can Unexpectedly Lower Your Credit Rating

Whether you’ve put a great deal of energy and effort into building your credit rating or you are trying to apply for a loan, only to discover that it isn’t going well, it doesn’t take much to ruin your plans. You’ve done your best, but your credit score may still be lower than you expected. If you are not sure what did the damage, one of these six things might have unexpectedly lowered your credit rating.

1. You Pay Cash for Everything

Never taking out a loan seems like the way to go. After all, your credit can’t be bad if you have never used it, right? Actually, taking out small loans and repaying them on time — paying off a credit card each month, for example — is better for your credit than never using it at all.

2. You Move…A Lot

Moving frequently makes you a credit risk because of the inconsistency. It may seem irrelevant, but you may find that you’re turned down for a loan due to the inconsistency of your residence.

3. You Just Changed Jobs

Moving frequently is a problem. Changing jobs frequently is an even bigger one. When a company gives you a loan, they want to know that you have consistent employment that will enable you to pay your debt on time. If you’re currently unemployed, chances are, you’re going to struggle to find a company that will take the risk on giving you a loan.

4. You Make Late Payments Frequently

If you fall behind on your credit card bills, mortgage payments, or car payments on a regular basis, it’s probably having a negative impact on your credit. If you want a strong credit score, it’s important that you pay all those debts off on time. Keep in mind that it’s not just loans that you need to pay off on time: late payments for your cable bill, your utilities, and other common payment that you make every month can also negatively impact your credit score.

5. There’s Incorrect Information on Your Credit Report

Are there judgments on your credit report that are incorrect? Loans that you didn’t check out? Mistakes happen! Make sure you check your credit report at least once a year in order to ensure that there are no inaccuracies on your report.

6. You’ve Made Too Many Attempts to Take Out Loans

Your credit report isn’t just based on the amount of debt you currently have. While your debt to credit ratio matters when it comes to your credit score, the number of times you’ve had your credit report checked recently can also have a negative impact. Try to avoid having it checked multiple times in rapid succession if at all possible.

Keeping your credit score high is important when the time comes for a loan — especially big ones, like the ones for your car or home. If you need a little extra help to get you by, contact us!