8 Factors which hurt your credit score

Profile Picture
By: skyden.dredge
on 24th Sep,2011

In personal finance, credit score plays a key role. A good credit score shows your credit worthiness.
8 Factors which hurt your credit score

In personal finance, credit score plays a key role. A good credit score shows your credit worthiness. If you have a good credit score, your chance of obtaining a loan with better terms and conditions is increased. Whatsoever, here we discuss about different things which impact your credit score negatively.

Making late payments

Your payment history is the key to your credit score. Nearly 35% of your credit score is dependent upon your payment history. If you make late payments on a regular basis, your credit score will surely receive a serious drubbing. So, it is recommended that you must pay your bills on time so as to maintain a good credit score.

Not paying at all

It may sometimes be the case that you do not make your monthly payments at all. This is more serious than you making late payments. The more you default in making monthly payments, you reach more closer to being charged off. This severely affects your credit score.

Filing for bankruptcy

File for bankruptcy is regarded as the last option available to you. Bankruptcy filing damages your credit score very badly and the negative effects remain on your for a considerable amount of time. It is recommended that before filing for bankruptcy, you should explore other debt elimination strategies such as credit counseling, debt consolidation or debt settlement.

Your account being charged off

If you do not make you payments at all, your creditors soon realize that you will not pay at all. In this situation, your creditors charge off your account. This put a severe stain on your credit report.

Very high unsecured balances

It may be the case, you make regular payments, but you have very high credit card balance. High credit card balance, depresses your credit score.

Creditors sending your account to collection agencies

If you default in making your payments to your creditors, the creditors sometimes send your case to a third party or a collection agency. A collection agency status on your credit score implies that your creditors have become fade up to get payment from you and then hired a collection agency to do that for them. Your case being referred to an collection agency is not at all a good sign for your credit report.

Defaulting on the loan

Like defaulting on a credit card debt, defaulting on a loan also affects your credit score negatively. Defaulting implies that you have not met the terms and conditions, contained in the loan contract. So, in order to preserve your credit score, make sure that you do not default in making payments to the loans that you owe to others.

Getting a court verdict

You a get a court verdict related to your debt pay offs, your credit score is severely damaged. A court judgment implies that you have defaulted in making payments. Then the court makes you pay the debts. This hurts your credit score badly.

It is important to know the factors which can affect your credit score negatively. This helps you take the right strategy to improve your credit score.

No votes yet

Page loaded in 1.150 seconds.