What’s Hurting Your Credit Score?

Many people with bad credit know they have bad credit often because they’ve been turned down for credit cards, loans, and other services. The problem is, those with bad credit often don’t know what specifically is hurting their credit. That’s why your credit report comes in handy when dealing with credit repair.

Bad credit is based only on the information that’s in your credit report. So if you want to know what’s hurting you, your credit report is the first place to look. You can order a free copy of your credit report from AnnualCreditReport.com. Once you get your credit report look for these things.

Recent delinquencies

Recent delinquencies, especially 90+ day payments.Payment history is 35% of your credit score, so late payments will do tremendous damage to your credit score. Other types of delinquencies fall under the payment history portion of your credit score. This includes charge-offs, debt collections, bankruptcies, repossession, foreclosure, lawsuit judgments, and tax liens.

Any unpaid bill

Any unpaid bill can become a serious delinquency, even if it’s not a credit card or loan. Many businesses now send even the smallest debts to a collection agency if that debt goes unpaid. Since collection agencies almost always add debts to your credit report, that means a $5.00 library fine or a $35 phone bill can end up on your credit report. This is great to know if you want to repair your credit. If you have any of these types of unpaid bills that have gone to a collection agency, they’re likely on your credit report and hurting your credit score.

Maxed-out credit card balances

Maxed-out credit card balances and balances that are close to the credit limit. The second-most important part of your credit score includes your credit card and balances. The closer your credit card balances are to your credit limit, the worse it is for your credit score. The same thing goes for any loan balances. If you have loan balances that are over or close to the loan amount, your credit score will be hurt.

Closed accounts that still have balances

It’s common for people to close their credit cards simply because they’re upset with the credit card company or because they don’t want the temptation of the credit card anymore. Unfortunately, this doesn’t hurt the credit card company, but it does hurt your credit score. Once your credit card is closed, your credit limit is usually reported as $0. If your credit card has a balance, it looks like you’ve maxed-out when really all you’ve done is closed the account. Such common errors are great to know when attempting to repair your credit score.

Too many recent credit applications

Your credit score takes a hit whenever you put in several credit card or loan applications. Each time you apply for credit, an inquiry is placed on your credit report. Inquiries count 10% of your credit score. Ten percent doesn’t sound like much, but that means too many inquiries can cost you 65 points on a 650 credit score.

Newly opened credit accounts

Fifteen percent (15%) of your credit score is based your credit age. This includes the amount of time since you opened your first account and the average age of all your credit accounts. Opening a new account lowers your average credit age and hurts your credit score. Closing the account doesn’t remove it from your credit report or take it out of the credit age equation. If you’ve recently opened a new credit card, the best way to repair your credit score is to wait.

Most negative information will stay on your credit report for seven years, with the exception of bankruptcy, which remains for up to 10 years. If you have any inaccurately reported negative information on your credit report, you can try hiring a credit repair agency or doing it through the credit report dispute process.