6 Reasons Why Your Credit Score Stinks
It’s not a mystery your credit score and your credit history plays an important role in your life. However, below I will share the top 6 reasons why your credit score stinks.
Payment history
This number should always show 100%. Anything below 100% = you are late on your payments and a risk to creditors. Top 6 reasons why your credit score stinks has everything to do with your payments being in the mail or late. Avoid having a smelly credit score, make all of your payments on time. Setup automatic payments to avoid ever missing a payment.
Credit card utilization
Keep this number as low as possible and at the very least below 30%. However, the 30% rule is only a benchmark. We always recommend staying at or below 10% at all times. Furthermore, to avoid paying interest don‘t carry a balance, EVER!
Derogatory marks
Anything negative such as judgements, charge offs, collection accounts, bankruptcies will dramatically lower your credit score and damage your credit history.
Age of credit history
Old credit is usually good credit. New credit is like a teenage driver. Higher risk, higher probability for an ugly accident. Keep older accounts in good standing open and avoid opening new lines of credit unless absolutely necessary.
Total accounts
Age of credit history and total accounts tells a story of success with credit. Where too few accounts don‘t allow for a big enough canvas too many accounts show a dependence on debt and a potential for default if the user is over leveraged.
Hard inquiries
The final reason of the 6 reasons why your credit score stinks has to do with hard inquires. These are called credit pulls or a deep dive into your credit report. When this number goes above 2 in a calendar year it becomes a negative indicator to the credit bureaus and in turn your credit score is punished.
Now you know the 6 reasons why your credit score stinks, now how to make it smell like a bed of roses? Continue the journey here.
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