Factors affecting your credit score

Article Written By: reliacredit

Your credit score depends on a number of factors. If you are in the habit of checking your credit score on a regular basis you will realize that a deteriorating credit score is a steady process. A little ignorance towards you financial activities can spoil your credit score. The following things harm your credit score to the maximum.

-Missing payments: It is obvious that missing payments hurt your credit score to a large extent. However, if the lenders report you as a delinquent, then you may be in for a big setback. Even a single late payment can tail your credit score off by 100 points. A FICO score of 720 or above is considered good and missing out on a single payment may dry up a healthy credit score.

-Applying for a lot of credit within a short period: If you do not have a fairly good credit score and still apply for more credit, you are at a very high credit risk. Applying for too many credit cards within a short span of time may trigger a few inquiries which prove to be disastrous for credit scores in the long run. Although it is important to get a few credit cards in order to build your credit score, it is also important to manage your credit efficiently else it may peter out your credit score by a good amount.

-Excess usage of the available credit: Using most of the available credit in all of your credit cards can cause problems as well. It is recommended that you donandrsquo;t use more than 34% of the credit limit on your credit cards. This way you play it safe and do not hamper your credit score.

-Closing credit cards: A lot of people think that closing credit cards will help them with their credit score. In fact closing credit cards can substantially harm your credit score. Getting rid of credit cards with a good credit limit simply increases your credit utilization, which definitely does no go down as a positive in your credit report. So make sure that you do not close too many credit cards within a short period of time, especially the ones with a high credit limit.

- Outstanding debt. This is the total amount you owe on items such as your car, home, and credit cards. This is also the amount of credit available to you. For example, if you have a credit card with a $3,000 balance and a $10,000 limit, you have the difference of $7,000 available in credit. That is better than having a $2,000 balance on a card with a $2,500 limit.

Once you have been irresponsible with your credit activities, your credit report is vulnerable to collections. The collection agencies at times may not call you before reporting to the credit bureaus. Collections go down in the credit histories as a big stigma and should be avoided at any cost.

About the Author

ReliaCredit provides you view of your annual credit report credit report with Identity Guard and also free credit score

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