A high credit score does not always indicate a bad credit rating. But mistakes made in the past can cause you to be turned down for a credit card. Diane Elizabeth is a woman with excellent credit scores. However, she was denied credit because of two late payments on one her credit cards in the past five years. After contacting the bank and reapplying, she was successful.
Low credit utilization
Having a high credit utilization ratio can have negative effects on your credit score. There are several ways that you can reduce your credit utilization. It is important to not exceed the credit limit on your credit cards. High credit utilization can be caused by using credit cards beyond their limits.
Credit cards can only be one type
Credit mix (or the combination of several types of credit) can affect your credit score. This makes up about 10% of your overall score. Your score will be lower if you have only one type of credit. You have many options to improve your score, including using multiple types of credit and decreasing your utilization.
Late payments
If you're making late payments on a regular basis, your credit score can be negatively affected. There are ways to make your credit score better and avoid making late payments. It is important to make timely payments and pay off past due payments. It won't remove any previous late payments but it will raise the payment history.
Multiple credit cards
While having several credit cards can help you raise your credit score significantly, it is important to be aware of the potential risks. Multiple credit cards can make you look like a risk to creditors. This can result in more debt and harder credit checks. Not only will this affect your credit rating, but it could also lead to a lower credit limit. It is best to only have one or two credit accounts with zero balances. So you only have to use them when you need them.
Having a long credit history
Your credit score is affected by the length of your credit history. This is because a longer credit history will result in a higher credit score. Another factor is how many accounts you have. A longer history means you are less likely to miss payments. Although you can reduce the length of credit history by closing older accounts, this will decrease your average age of accounts. Your credit score will also depend on the age of the last account.
A solid payment history
Credit scores are affected by your payment history. Your credit score will rise if you pay your bills on-time. Late payments can harm your score. It is important to note that late payments from older accounts can affect your score.
Keeping track of your debt
A key part of credit repair is keeping track of how much debt you have. Your credit score will make up a third of the FICO score. You must be careful about how you use your credit. To improve your FICO score, you might have to lower your debt.