Personal Finance

5 Financial Mistakes that can Affect your Credit Score

Having a bad credit score may make you look like a risk to any moneylender. Living in the moment is not an option.
In the future, your financial situation may be different and you may want to borrow for a home, holiday or car. Having a bad credit rating now may hinder your borrowing options in the future.

There are moneylenders who will always lend money to people with a bad credit rating. However, be wary of excessively high interest rates and unrealistic repayment terms from these financiers.

Failure to pay your bills on time

It is important to always pay your bills on time. If you don’t this is the easiest way to affect your credit rating. If you are struggling with finances at any time, contact the company that issued your account. Many companies allow customers to have an extension on their payment or even allow customers to pay off their account in instalment plans.

Declaring bankruptcy

If you have been struggling with your finances for some time and feel the only way out is to declare bankruptcy, be sure to seek professional advice before taking this drastic step. Bankruptcy will stay with you for many years and will have a massive impact on your credit score.

Take out a loan

Paying cash for everything and never obtaining a loan might seem like the correct financial course to take. However, in the eyes of a credit agency, no debt can also equal bad debt. Make sure to investigate interest rates and the best financial institution to use before making any loan applications.

Never cancel a credit card

The burden of having a huge credit card debt can be debilitating. You have worked out a plan and have finally paid off the balance owing. With zero balance owing, you may feel like cancelling your card. However, this would be the wrong thing to do when you now have a good credit card rating. Owing nothing on your card will give you a good rating for ten years or more. It is a much better idea to keep the card in a safe so you will not be tempted to use it again.

Never checking your credit report

It is important to not assume that your credit score is fine. Make sure to check your credit rating with a credit reporting agency. These reports are free and are usually available within two weeks. Be sure to check your personal details, as your address may need updating. If you do notice anything incorrect on the report, contact the agency and they may be able to fix it immediately.

Your credit score stays with you for life, so it is very important to take financial responsibility at the outset. If you are overwhelmed by the amount of debt you find yourself in, engage the services of a debt consolidation company like Dealing With Debt. They can help you regain control of your finances and your life.

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