A high credit score does not always indicate a bad credit rating. You may be denied credit for past mistakes. 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
High credit utilization rates can have negative consequences for your credit score. There are many ways to reduce your credit utilization ratio. First, you need to make sure that you do not overextend your credit cards. Avoid exceeding credit card limits as it will lead to high credit utilization.
You can have one type of credit
Credit mix or the combination between different types of credit can have an impact on your credit score. This contributes about 10% to your overall score. Your score will be lower if you have only one type of credit. There are many things you can do to improve your score.
Late payments
Your credit score might be negatively affected if there are regular late payments. There are ways to make your credit score better and avoid making late payments. If possible, make sure to pay your past due bills on time. This won't reverse any past late payments but it will make your payment history more detailed.
Multiple credit cards
Having several credit cards is a great way to raise your credit score, but you should also know the risks involved. 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. You should only keep one or two credit cards that have zero balances. You will be able to only use them when absolutely necessary.
Credit history that is long
Your credit score is affected largely by the length of credit history. This is because your score will increase the longer you have credit history. You also need to consider how many accounts are you currently have. A longer history means you are less likely to miss payments. However, closing old accounts will reduce the length and age of your credit history. The age of your last account will also affect your credit score.
A solid payment history
Your payment history plays a major role in determining your credit score. You'll see a rise in your credit score if you make your payments on time. But late payments can impact your score. Remember that late payments on older accounts may affect your score more than the ones that are current.
Tracking your debt
Keeping track of your debt when your credit is too high is a critical part of the credit repair process. Your credit use is an important part of your FICO score. It accounts for about a third. If your debt is too high, you may have to reduce the amount you borrow to improve your score.