8 Financial Red Flags That Will Impact Your Credit Score
Everyone tends to worry about their credit score at some point. After all, this number is tied to your name and reveals how high interest rates will be and if you can even get approved for a loan or credit card. Below are 8 red flags to watch for that will impact your credit score.
- Keeping your credit utilization under 30% is a big deal. If it’s over this number, the credit score will decrease even though you may be making payments on time. Having credit cards nearly maxed out also lowers your score and looks really bad to lenders.
- Do not be late making payments. Being late even by a few days can really hurt your overall score. In fact, one late payment can ding your report 50-100 points. This is very significant and should be avoided if at all possible.
- Struggling to make minimum payments is a sign that your overall financial health could be facing a major crisis. Having to decide which bill can be paid late is not a good thing. Do not get into more debt than you can afford to pay.
- Opening new credit cards because you are broke is not a good thing either. This will hurt you in the long run. It dings your score when there are hard inquiries on your credit report. Plus, this adds more debt to your name.
- One may think they do not have to check their credit report very often, but that is not the case. Everyone should be checking to ensure accuracy and monitoring debt. Not knowing your score could be a real shock when it comes to applying for a loan and getting denied.
- Do not close old accounts. It may seem like a good idea, but closing them gives you a shorter credit history, which can also affect whether you are approved for a loan or not.
- Co-signing loans can also hurt you and your overall credit score. If the person you signed for is late making payments, it affects you as well. If you decide to do this for someone, make sure they are responsible and won’t let you down.
- Another big red flag is the debt-to-income ratio. If you have more debt than income, this can really hurt your chances of being approved for a loan. Plus, it will lower your credit score. It makes borrowers look irresponsible if they cannot manage their debt properly and keep it to a minimum.
Overall, following these tips and watching for red flags on your credit report can save you a lot of grief in the future.
Jamie is a Nurse and a mom of boys whose true passion is writing. She loves reality, cooking and paranormal tv. Jamie has been writing online for several years.
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