5 Red Flags that Will Ruin Your Credit Score
Maintaining a good credit score will open up many financing opportunities for you in the future. So if you want to have a flawless credit status, you might want to avoid these red flags in your personal activities:
1. Missed bill payments
Part of your credit score is based on the analysis of how good you are in paying your bills. Although you might think that missed payments won’t affect you because it’s not related to credit, the fact that you’re not a good payer will surely put a red flag on your credit score.
2.Multiple new credit cards
Considering that a low credit utilization ratio is a factor to the credit score, some people will think that having new credit cards will improve their status. No, it doesn’t work that way.
3. Balances in multiple credit accounts
You may be able to juggle your finances among multiple credit cards, but such scenario can still adversely affect your score. It’s advisable to maintain one or two primary cards and clean the balances of your other accounts at all times.
4. Payment for services that could affect financial capability
There are certain services and establishments that lenders may be cautious when they see that you’re paying for them. Some of these are credit card payments for services to a divorce or personal bankruptcy lawyer. Sometimes, a sudden withdrawal of cash in massive amounts can also raise a red flag.
5. Credit applications in more than 2 weeks
The more frequent you apply for credit accounts, the greater chance for you to have a lower credit score. It’s a sign that you’re in financial distress. But according to financial experts, applications made within 14 days can be considered as 1 occurrence by credit assessors. So if you’re thinking of taking out a loan, do your shopping within the 2 weeks’ time.
The rule of thumb is to be cautious about doing something that will identify you as a bad debtor. It also helps if you take advantage of the free credit score report, if any. In the US, you have the right to ask for such report at least once a year.