A person's credit score has become very important in this day and age. Your score is what creditors and lenders look at to quickly decide if you are a good or bad risk to lend credit to. It is important that you learn what types of actions hurt your score so that you may avoid them.
1 - Late Payment
Over one third of your credit score is tied to your payment history. Repeatedly being late on payments can and will hurt your score. Pay your bills promptly to avoid this.
2 - Failure to pay a bill
Ignoring a due payment entirely is even worse than paying late. Every month you do not make a payment is one month closer you are to having your account charged off.
3 - Account Charge Off
If a creditor thinks you are not going to pay your debt ever, then they will charge off your credit account. This is one of the most damaging reports that can appear on your record.
4 - Being written off to collections
Credit companies almost always use 3rd party collections agencies to attempt collection of severely delinquent accounts. It is rare that the original creditor will not have written the debt off before selling it to the collections agency. Collections status indicates that the creditor had given up attempting collection, and sold it off to a 3rd party.
5 - Loan Default
Defaulting on a load is similar to a charge off on a credit card. A default basically shows that you failed repeatedly to make repayment on your loan as initially agreed upon in contract.
6 - Bankruptcy
Bankruptcy is a plague for your credit score. In most cases it is expected that you seek alternative methods of debt handling before declaring bankruptcy.
7 - Foreclosure
Failure to make your mortgage payments on time will eventually lead to foreclosure. This is essentially just another form of default, but it leaves you homeless if you do not have someplace to go after you lose your house.
8 - Judgment
Having a judgment on your record shows that not only were you not paying your bills, but the court system had to get involved to force repayment. Both terms hurt your credit record, but a paid judgment is better than an unpaid one.
9 - High balances
Having high balances means high utilization of credit in relation to your credit limit. This is frowned upon, and will lower your credit score.
10 - Maxed lines of credit
Maxed credit cards and over the limit credit cards cause your utilization to be 100%. This is not good for your credit score.
11 - Closing cards with balances
If you close a credit card and it still has a balance, the limit on that card drops to $0 while your balance stays at what it was. This essentially makes your credit card look maxed, and will make your credit score drop.
Photo Credits: Logan Antill
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