If your are trying to fix credit score, you should know that there are several items that commonly have a negative impact on your credit report. Any one of these damaging items could cost you a lot, in terms of paying higher interest rates on your mortgage, car loan, insurance, or even having the possibility of being declined on the credit applications. So, what are the major damaging items that you should be aware of?
1. Go beyond Credit Limits
When you exceed your credit limit, you are giving yourself a hard time getting new credit in the near future, even though you have always paid your bills on time and never had any charge-offs or debt collections on your record.
Having a high debt-to-credit-limit ratio can drop many points off from your credit score. In addition, many lenders would tend not to extend credit to you when you are maxed out, regardless if you are current with all of your bills or not.
If your credit card is at its limit or very close to it, try your best to pay down the balance. You should not carry a balance over 30% of your credit limit every month to keep your credit score in good shape.
2. Charge offs
Normally charge off appears on your credit report is after you have missed the payments for about 6 months or longer and your creditor has written the debt off or sold it to a debt collection agency. At first, it may look like you no longer owe your creditor, but you still owe the debt to the party who bought your debt.
Charge off is quite a damaging item because it shows that you are either unable or unwilling to pay off debt, or unwilling to work with your creditors to find appropriate payment arrangement. If your debt is sold to a debt collection agency, they will also report a negative item on your credit report. With that said, it can result in 2 negative items for one unpaid debt.
3. No Credit or Lack of Credit
Your credit history tells all. When you close your old or unused credit card accounts, you basically erase your credit history and you may find it difficult to open new accounts in the future. Similarly, if you have no credit, you can expect to have not so favorable financing terms than those with established credit history. Why? Most lenders use credit report and history to see if you are a good borrower.
Remember, there are no quick and easy ways when it comes to obtaining the best credit score. If you are having problems with negative items on your report and don’t see that you can fix credit score on your own, you should look for credit repair help. A reputable credit repair service can help you remove these damaging items and improve credit score much faster.