3 Things that Hurt your Credit Score the Most

Your credit score is incredibly important when it comes to your finances. It’s important to know what affects your credit and to what extent. In this article, we will be discussing 3 things that hurt your credit score the most.

Credit score concept We’ve all seen those commercials about checking our credit scores. The person in-the-know is confident and at ease, able to purchase the items they want. The other person who does not stay on top of their credit score is at a loss, sometimes humorously depicted as unable to accomplish anything financially (such as cars & homes, you name it). We’re here to tell you that these over-dramatic representations of good credit vs. bad (or unknown) is pretty on point with reality. You may not get stranded in the desert, but you may find yourself unable to apply for mortgages, car financing, or find yourself paying much higher rates across the board. Unfortunately, a lot of people do not spend a ton of time thinking about their credit scores. This idea of a number that is a direct evaluation of your financial career up to this point may seem bothersome and somewhat daunting. Just like receiving an important test score, receiving a credit score can sometimes fill the senses with the same anxieties. It’s important to know what your credit score is, how to improve it, and, if its not as great as you’d like it to be, how to get it to where you want. The important thing to know is that nobody is perfect, but there is always room to grow and expand your financial knowledge to boost those scores in a matter of months. In this article, we are going to discuss 3 factors that hurt your credit score so that you can watch out for these financial behaviors to start improving your score.

1. Making Late Payments/No Payments.

Not making timely payments on your credit cards, loans or any entity accounts for 35% of credit scores. The only simple solution to this is to make sure you are making your payments on time, every time. One or two late payments adds up quick and you don’t want to see your credit score drop so drastically because you forgot. A suggestion is to set up automatic bill pay if you have a hard time remembering to get these paid on time. Making no payments is a quick way to have collections knocking at your door. This is possibly the worst case scenario for your credit score. Avoid this disaster by making sure you are aware of all the monthly payments you owe. This may sound silly, but it happens more often than you think.

2. Maxing out your Credit Cards.

Idealistically, you should only be using about 20-30% of your available credit. Keeping your credit cards maxed out at all times looks bad to lenders and ultimately drops your credit score down. Obviously, emergencies happen and that’s why we have credit cards, but in a case of emergency, make sure you make those payments on-time and are paying more than just the minimum payment. That way you won’t get stuck in debt or risk having your credit score drop.

3. Applying for multiple credit cards over a short length of time.

When a lender sees that you have opened up several new credit cards, this sends up a red flag. It’s pretty simple, creditors assume the more credit cards you’ve opened up, the more you’ll be buying things on credit. To them, this possibility means that you may not have the finances to pay them back. This is most important when applying for mortgages.  

Places to check your Credit Score.

There are tons of websites that do credit checks. The top two we recommend are FICO and Credit Karma. Both of these websites offer a surplus of information when it comes to your personal credit. Not only will you find anything and everything about your own personal credit score, you will also find loads of information about how to improve your credit and refinancing options & comparisons (this is a very cool feat.). Once you’ve taken the leap to checking your credit score on one of these trusted sites, take some time to familiarize yourself with the website and all there is to offer. Check out America's Best Bookkeepers About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.