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Most people are aware that a poor credit score means they’ll find it almost impossible to secure credit. As you can appreciate, a bad credit rating means you’re unlikely to get accepted by mainstream lenders, especially if you want to get a mortgage to buy a house.
You may have ended up on this page because you recently discovered to your horror that you couldn’t get credit. Or, you’ve been naughty with your previous borrowing, and now your past is catching up with you.
Keep reading to learn more about the worst things that can harm your credit score and what you can do to fix those problems.
Taking out too many loans
Creditors use a variety of factors to determine your eligibility for one of their loans. As you’ve no doubt guessed, your credit score is one of the factors most lenders consider.
What happens if a potential new lender can see that you’ve taken out a lot of loans and credit cards in the past? The answer’s simple: they’ll likely decline your application for any further borrowing.
When you have too much borrowing, the simple answer is to pay off those debts first. Potential lenders will view your application more positively if you’ve got a better debt to income ratio.
Not paying back those loans
If you don’t meet your agreed loan installments each month, that information gets recorded against your credit score. And, as you can imagine, your credit rating ends up decreasing because of missed payments.
Some people fall on hard times, such as getting laid off from work. As a result, they have no way of meeting their financial obligations. Of course, most people will end up getting a new job – but the damage has already been done.
If you find that you’re still unable to meet your financial responsibilities, you’ll need to do something about the problem. Several options are open to you, such as debt consolidation or following a strategy like the Debt to Success System plan.
Identify fraud
The sad truth is that thousands of people unknowingly become victims of fraud. It’s when they try to take out a loan or credit card that they realize what has happened to them.
Identify fraud usually happens because fraudsters have somehow managed to gain access to your financial information. Examples might include information stolen through phishing emails, or from the database of an entity like a bank or some other financial institution.
If you’ve been the victim of identity fraud, the good news is you can do something about the problem. However, the bad news is that it can take a long time before fraudulent lending gets removed from your name, and your credit score improves.
Final thoughts
Several other factors can affect your credit score. The main ones are taking on too much credit, not meeting your agreed payments, and falling victim to identity fraud. It’s worth reviewing your credit score regularly, even if you don’t intend to borrow any money.
That way, you’ll soon discover if anything’s amiss with your credit rating and take the necessary steps to remedy any problems.
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