Do you have a history of debt and are worried that your credit score is going to be ruined?
With Americans over 13 trillion dollars in debt, it is no wonder that you are a little nervous about your situation. If debt is taking all of your disposable income and you're finding it harder and hard to pay, this can be a problem.
Continue reading this article to learn what impacts your credit score and how to build your credit back even if it's low.
1. Late Payments
Late payments are one of the worst things you can do for your credit. The later the payment is, the worse it is for your credit.
If you can't remember when to make your payment, put your automatic payments on a credit card and pay it off before the credit card reporting date. This is an easy way to keep on track and keep from over-drafting your bank account.
2. Credit Inquiries
If you apply for a lot of credit at once, this can signal to lenders that you are in trouble. If you're in trouble and need help paying your bills, many lenders don't want to take the risk that you aren't going to pay them back.
It's even worse if you're applying for loans to lenders that charge high-interest rates.
Change that to It's even worse if you're applying for loans to lenders that charge high-interest rates, such as payday loans.
3. Maxing Out Your Credit Cards
If you're always operating at the top of your credit card limit, that doesn't give you a lot of wiggle room. Using too much of your credit cards each month makes it risky to lend to you.
Try keeping the percentage of credit that you use each month to 30% or below for the best results with your credit score.
4. Closing an Account
If you closed an account because you wanted to save on the annual fee of the credit card, you might think you're doing yourself a favor. You're saving money, right?
While you might be saving money, you're cutting off a card that can show potential lenders that you are a responsible user of credit.
While you can look into tradelines for sale where you can pay people to put you on their aged accounts, you should keep your own accounts alive as long as you can.
5. Not Using Your Credit Cards
If you have credit cards, but you aren't using them, this isn't going to help your credit.
Using and paying down your credit cards each month is a great way to show lenders that you know how to work with credit. Not using them won't give lenders anything to go off of.
Recovering from a History of Debt
Now you know more about what to do when you have a history of debt, but you want to have a good credit score. You can regain your good credit score even if you've had a bad history of repayment and other problems.
Do you need more help with finance issues and other topics? Our site has many articles that can help you in these areas.
Browse our site, find finance-related articles of interest, drop a bookmark, and come back again soon.