Going through a bankruptcy can be a stressful and time-consuming situation. We at The Weller Legal Group are here to help make the bankruptcy process easier and more efficient for you and your family. Every year, over one million Americans will file for bankruptcy. We at The Weller Legal Group want to help you to feel more comfortable with the bankruptcy process. In this article we are going to talk about the top 10 things that can affect your credit score.
The first topic we wanted to discuss that affects your credit score is having late payments. Having one late payment will probably not affect your credit score too much but if you begin to make it a habit to make your payments late each month you definitely could start seeing dings in your credit score. Some tips that you might be able to implement is see if you can set up your monthly payments to become automatic. You can either do this by having the monthly charges go directly to your credit card or you can set up automatic mail payments with your bank and they will mail your checks each month for you. Make sure to make it a priority of yours to make your payments on time, especially if you want to maintain a good credit score.
The dreaded monthly utility bills can have an effect on your credit score too! Many people do not know this but making late payments on your utility bill or failing to pay those bills altogether can have a negative effect on your credit score. If you are planning to move to a new location make sure to take care of any utility balances you had with your previous residence. If you decide not to pay any utility balances from your previous residence you could very well see a ding on your credit report in the future.
This revolving utilization is a term used for the percentage of debt you are using compared to the limit that you are given. Revolving utilization is also known as “debt-to-limit-ratio.” For example, if you are given a credit limit of $10,000 and you only decide to use $1,000 of this limit, you would be considered to have a credit revolving utilization percentage of 10%. It would be best for you to try to not carry a balance each month so you don’t have to pay interest, but if you do decide to carry a balance each month try to keep the revolving utilization percentage under 30% and if you can keep it under 10% that is even better.
Applying for More Credit
Something that a lot of people may not realize is that each time you apply for more credit this can actually have a negative effect on your credit score. Applying for larger loans, for example a home or car loan will have a greater effect on your credit score. Each time you apply for the loan you are “pulling” from your credit and that is what can knock your credit score down in the short term. Many real estate agents may also recommend to you not to apply for a car loan if you are looking to apply for a home mortgage in the near future. This is because if you do this you may be able to get approved for the car loan but may get rejected from getting your home loan.
Length of History
The length of history for one’s credit score is a significant factor in determining your credit worthiness. People with a long credit history are deemed more stable and predictable in determining whether or not they will be a good candidate for a new loan. Many bankers will usually advise you not to close your very first credit card for this very reason. Even if you are not using that first credit card that you got in freshman year of college, it would probably be wise of you to keep that line open so you are showing a long credit history with many years for creditors to analyze.
Credit Report Errors
It is important that you keep an eye on your credit report every few months. Every so often there can be mistakes and errors that show up on your credit report. Make sure to check your credit report so that there are none of these mistakes that are hurting your credit score. If there are any mistakes on your credit report you should try to clear things up as soon as possible so it doesn’t continue to bring down your credit score.
Canceling a Credit Card
This may come as a shock to you but canceling a credit card can actually cause your credit score to decrease. This is especially true if your credit card currently has a zero balance. This has to do with the overall credit revolving utilization ratio. If you have a zero balance on your credit card it may be better for you to keep that card open, especially if you have a high credit limit on that card. Make sure to discuss with your banker first if you are thinking about closing a credit card in the near future and see what their opinion is on if it will hurt your credit score or not.
Going through a foreclosure can be a very stressful and time-consuming process. Unfortunately, the headaches sometimes don’t always end after the foreclosure is finished. A foreclosure can drastically reduce a person’s credit score and may stay on their credit report for up to 7 years. This is why it is so important for you to call our firm first if you are going through financial hardships. We will try our best to help you through the bankruptcy process and with rebuilding your credit score after everything is finished.
This is a story that will continue for years and years to come. Try to not fall in the trap of becoming a victim of a cosigner nightmare. This has to do with when someone who has good credit helps someone with no credit or bad credit get a credit card. If the person with no credit decides not to pay or make late payments each month the cosigner is responsible for that person. Be very careful if you decide to help cosign a credit card for a friend or family member. If they don’t pay you will be responsible for their debts and if they pay late each month, your credit score is the one that will be affected.
Not Having a Credit Card
The last thing that we wanted to mention on our list is not having a credit card. If you do not have a credit card or loan then you will not be able to start building up your credit history. Credit is very important in America, especially if you want to get home loans, car loans, or even sometimes just to get basic utilities set up. If you do not have a credit card today you should look into getting a low limit credit card to start your credit journey. It will take at least 6 months of having your credit card open before you will be able to qualify for a FICO score.
We at The Weller Legal Group hope that the information provided to you in this article helped you understand our top 10 list of things that can affect your credit score. Going through a bankruptcy is not the end of the world and may even be a great start to a fresh new beginning. We at The Weller Legal Group have over 20 years of experience in helping our clients with bankruptcies and improving their credit scores. We have offices located throughout Florida, including, Clearwater, Port Richey, and Lakeland. If you have any other questions in regards to filing bankruptcies or working on improving your credit score feel free to give us a call today at 1-800-407-3328.
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