When Good Credit Goes Wrong

Those who haven't seen their credit score in several years are often surprised when they find out that it's recently dropped. There are so many different things that go into coming up with your credit that it's easy to forget them all. However, you can't avoid bad credit if you don't know what causes it, which is why we've compiled this list of some of the most common causes of it! By taking advantage of these you won't even need to use bad credit auto finance!

Late Payments

One of the absolute worst culprits of bad credit is late payments. It's easy to forget about making your monthly payment on time, especially if you're juggling multiple credit cards, but it can be disastrous to your credit. Just a couple of late payments each year can have drastic effect on your credit score, so set yourself reminders or sign up for an automatic payment system if you have trouble paying on time.

Debt to Available Credit Ratio

Another way you can hurt your credit score is by having a poor debt to available credit ratio. Consumers that have a large amount of debt and very little credit left are likely to see their score suffer as a result. Most financial experts recommend using less than half of your available credit, otherwise your score could drop. If you plan on using bad credit auto financing soon, try lowering your debt to available credit ratio before applying to get the best results.

Bankruptcy

Perhaps the biggest killer of credit is bankruptcy. Declaring bankruptcy will essentially stop you from taking out any new lines of credit for at least the next couple years. It stays on your credit report for several years and will generally make life difficult. You may even have trouble getting approved for bad credit auto finance. In other words, avoid bankruptcy at all costs.

Total Debt

Your total amount of debt can also be responsible for a poor credit score. If you've opened a dozen credit cards and have several large loans, you've probably accumulated more than $10,000 in debt already. Unless you're earning a large income that could allow you to pay that debt off quickly, chances are your credit score is hurting.

Account Age

Did you know the age of your credit accounts or loans can play a part in determining your credit score? As it turns out, the credit bureaus see the age of your accounts as an important factor. Younger accounts are given less consideration, but those that are several years old are closely examined. Older accounts give a better and more accurate history of your credit usage, so try keeping them in good shape.

Credit Inquiries

Many people are unaware of the fact that every time they apply for a new line of credit, their score takes a small hit. A couple credit inquiries every now and then shouldn't hurt your credit too much, but frequent requests for credit can. Lenders and credit bureaus see too many credit inquiries as a sign of desperation, so only apply when necessary.