What Kills Credit Scores
There are several different reasons you may have a low credit score. Many of these reasons can be fixed with several years of on time payments, though of few of these reasons may take a decade or more to heal completely.
1) Bad Credit History - A single missed or late payment can drop your credit score significantly. You do not need to have the credit card companies file a complaint in order to reduce your credit scores - one late payment, even by a few days, can cause your credit score to drop. County Court Judgments (CCJs) can cause your credit score to drop even more. All payments should be paid in full and on time if you wish to keep your credit score high.
2) Changing Addresses - Credit companies like to see that you are not constantly moving. This is one of the lesser known credit killers. The effect of changing address is not high, but it can be the difference between being approved for a low interest rate loan vs. a high interest rate loan, so not moving around constantly is a good way to keep your credit high.
3) Employment Status - Creditors like to see two things: That you have a job and that you have been sticking with it. Quitting your job can affect your credit score, as can leaving your job for another one. For people that work from home as consultants or individuals that are attempting to start their own business, this credit drop can be incredibly detrimental, so keeping other aspects of credit high is a must.
4) Bank Accounts - Credit companies and lenders want to see that you have money. They do not always care how much, but knowing that you have a bank account gives them the assurance that you will use it. Not having a bank account or recently opening one can negatively affect your credit score.
5) Too Many Credit Applications - Applying for credit is always recorded in your credit file. If you a constantly signing up for new credit cards, no matter what your balance is on the cards you already have, you will lose points in your credit score. Keeping just two credit cards and not getting too tempted to sign up for every mall card you can find is very important.
6) Too much debt - Too much debt in school loans, home loans, and credit card bills always negatively affect your credit. The more you owe, no matter how well you pay it off, the worse your credit is. Keeping your debts low is important if you wish to take another loan in the future.
7) Bankruptcy - Bankruptcy is the ultimate credit killer. Depending on the amount of debt you had when you went bankrupt as well as your credit score at the time, bankruptcy may be a credit killer from which you can never recover. One should avoid bankruptcy at all costs if they hope to ever get a future loan.
By avoiding these credit killers it is possible to keep your credit score high and qualify for whatever loans you need. It may seem difficult at times to budget for all of these payments in order to keep your debts low, but keeping them low can be the difference between owning a home someday and getting rejected.