A high credit score does not always indicate a bad credit rating. A credit card application can be rejected if you have made mistakes in the past. 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, she was successful in reapplying.
Low credit utilization ratio
High credit utilization rates can have negative consequences for your credit score. There are many ways to reduce your credit utilization ratio. First, make sure you are not maxing out your credit cards. You should avoid using them to their maximum limits, as this will result in a high credit utilization ratio.
A single type of credit
Your credit score is affected by your credit mix, or the combination of different types of credit. This makes up about 10% of your overall score. You will have a lower score if you only have one type credit. There are many things you can do to improve your score.
Late payments
Your credit score can be adversely affected if you are making late payments regularly. There are still ways to avoid paying late and to improve credit scores. If possible, make sure to pay your past due bills on time. While this won't erase previous late payments, it will raise your 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 your credit history look bad and could lead to increased debt and credit checks. Not only can this hurt your score, but it can also lower your credit limit. It is best not to have more than one credit card with zero balances. You will be able to only use them when absolutely necessary.
A long credit history
The length of your credit history is an important factor in your credit score. This is because a longer credit history will result in a higher credit score. The number of accounts you own is also a factor. You are more likely to make payments on time if you have a longer credit history. You can lower the length of your credit history by closing old accounts, but this will lower your average age of accounts. Your credit score will also depend on the age of the last account.
Good payment history
Credit score is affected by your payment history. Your credit score will rise if you pay your bills on-time. However, late payments can hurt your score. Remember that late payments on older accounts may affect your score more than the ones that are current.
Tracking your debt
It is crucial to keep track of your credit when you have too much credit. Your credit score will make up a third of the FICO score. You must be careful about how you use your credit. Your credit score will be affected by how much you borrow.