Reasons For A Bad Credit Rating

When you applied to get a mobile phone contract, you may have heard that your credit rating was too low. What exactly does this mean? What is considered a low credit score, and how did you end up with one? A lot of people ask themselves these questions, and we are here to try and help you answer them. By knowing what is causing your bad credit score, you can work to fix it more quickly. Keep in mind that not everything below will apply to you, and that the best way to figure out your specific problems is to obtain a full copy of your credit file. Once you have it, you can begin comparing it with the list of common causes of a bad credit rating listed below.

  • Credit Cards
  • Your credit cards play a large part in determining your credit score. Not only do you need to at least have one, but you need to use them in the proper way. If you are spending to your credit limit on each of your credit cards, it will harm your credit rating.

  • Debt
  • If you owe a lot of money, whether it be on a personal loan, on your credit card, or somewhere else, it will hurt your score. Credit reporting agencies want to see that you can pay back your debts, so you will want to eliminate these as quickly as you can. Click Here to learn more about getting out of debt.

  • Missed Payments
  • One thing credit reporting agencies hate is when you miss a payment. This shows that you can not properly budget your money, or that you are forgetful when it comes to payments. If there are late or missed payments on your credit file, it will negatively impact your score. The longer you can go without being late with any payments, the better it will look for you. The best way to not miss any payments is to ensure you have a proper budget that you stick to, and to set reminders for yourself as to when the payments are due.

  • Credit History
  • Lastly, for your credit score to be healthy, it is not enough to have good habits for just a few weeks, or even months. Credit reporting agencies want to see that you can keep these habits up for a long period of time. This is why the longer your credit history as, and the longer it shows that you know how to handle your money, the better your score will be. If you are just starting out, and you are unsure why your credit score is low – since you have not done anything yet to harm it – the simple fact that there is nothing to show on your file may be the reason you score is so low.