Having good credit is something that can increase your chance of being accepted for finance. Because of this,you want to pay close attention to your credit rating and work to maintain a healthy one. Below,we will be going over some of the top things that can affect your credit rating.
Top Things That Can Affect Your Credit:
1. Late Payments
The is perhaps the most significant one. Not making your payments on time is a crucial mistake that many make. This includes everything from your electric bills to your telephone and credit card bills. Everything needs to be paid on-time. By paying your bills on-time,you will be able to maximise your credit score. Creditors want to see that you are responsible for your payments. Thus,the more often you pay your bills on time,the higher your rating will be.
2. Not Using Credit
This is one that many aren’t even familiar with. While it is relatively known that being irresponsible with your credit can hinder your rating,not having credit is another thing that can negatively affect it. Whether you don’t have credit at all or you have limited credit diversity,you will negatively affect your credit either way. Because of this,you want to look to have a mix of credit types in order to positively impact your rating. Likewise,you want to use the credit to showcase that you do make payments on time and that you are responsible with the credit you have.
3. Cancelling Credit Cards
If you have a credit card that has an annual fee attached to it,you might be tempted to cancel it. While you could always cancel your cards to avoid paying the annual fee,it might not be the best idea. After all,cancelling your cards will end up reducing the total credit that you have available. Because of this,it can end up increasing your credit utilisation very high which can negatively impact your rating. Along with this,it can dramatically shorten your credit history which can also impact your ability to have a high rating. This is generally why you never want to cancel credit cards that you have had for a long time because it will reduce the history on your report.
4. Opening Too Many Accounts
Another thing that can have a negative impact on your overall rating would be the number of credit accounts you have opened up recently. Each time a creditor pulls your report,you are going to have a decrease in your credit score. Because of this,you want to think about credit that you apply for prior to doing so. While a small hit to your credit might not impact you too much if you aren’t looking to apply for financing,if you are looking to do so,even a small hit to your rating can cost you a lot of money. Thus,you should think about how you are looking to utilise credit prior to applying for new accounts.
Overall,there is a lot that can impact your rating. Some of it is relatively straightforward and some might be brand new knowledge. By utilising the tips above properly,you should be able to make strides at improving your credit rating to increase your chances of being accepted for financing.