What Are the Things That Can Negatively Affect Your Credit Score?

Your credit score is a critical factor that banks and other financial institutions use to decide whether to give you a loan or credit card. 

A single late payment won’t hurt your credit score. However, multiple late payments or missing a payment on any bills, including car loans, credit card bills, student loans, and mortgage loans, can affect your credit score.

A lender looks for two main factors when calculating the age of your credit accounts, which include:

The average age of your combined accounts, which is calculated by adding the age of each account and dividing it by the total number of accounts you have.

Do not close your older account, even if you are not using it. Keep it open, especially if all your other accounts are new.

Credit inquiries include soft and hard inquiries. Soft inquiries do not show up on your report nor affect your score. However, hard inquiries do show up on your credit report and can lower your credit score, especially if too many inquiries are done in a short period.

Debts you owe or using more than 30% of your credit utilization ratio can lower your credit score.

It is important to have different types of credit accounts, such as installment accounts, open accounts, and revolving accounts. Even if you have closed these accounts, they still count for whether your credit history is diversified. Your credit score can decrease if your credit report has only revolving accounts.

Unpaid utility bills can affect your credit score, especially if your debts get turned over to a third-party debt collector.

Major errors in your credit report can lower your score. Contact your lender or bank for assistance and report the errors to the credit bureaus.

If you fail to make payments for your child support, it is considered as debt and can affect your credit score.

Unpaid parking tickets are considered outstanding debts and can appear on your credit report, thus damaging your credit score.

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