A high credit score does not always indicate a bad credit rating. An individual can make mistakes and be refused a credit card. Diane Elizabeth, a woman of excellent credit, was turned down for a credit card because she made two late payments over five years on one of her credit accounts. 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. Fortunately, there are several ways to lower your credit utilization ratio. First, make sure you are not maxing out your credit cards. It is best to not exceed your credit limit. This will lead you to high credit utilization.
A single type of credit
Credit mix (or the combination of several types of credit) can affect your credit score. This account for 10% of your overall credit 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
Your credit score may be affected if your regular late payments are a problem. However, there are ways to avoid being late and to improve your credit score. You can catch up on past payments if possible and make your future payments on schedule. This won't reverse any past late payments but it will make your payment history more detailed.
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. You could appear as a risk by using more than one credit card. This can cause you to be more in debt and subject to hard credit checks. This could not only lower your credit limit, but also hurt your credit score. It is best to keep just one or two credit cards with zero balances. This way, you can only use them when you really need them.
Long credit history
Your credit score is affected by the length of your credit history. This is because the better your credit history, you will get a higher score. You also need to consider how many accounts are you currently have. A longer history means that you are less likely not to miss payments. Closing old accounts can decrease the length of your credit history, but it will also lower your average age. Credit score is also affected by the age of your oldest account.
Having a good payment history
Your payment history plays a major role in determining your credit score. Paying your bills on time will lead to a higher credit score. You can also lose your score if you pay late. Remember that late payments on older accounts are less important than those from recent years.
Keep track your debt
Credit repair is only possible if you keep track of your debt. Your debt is responsible for a third of your FICO score. Therefore, you need to be vigilant about your credit usage. If your debt is too high, you may have to reduce the amount you borrow to improve your score.