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Common Mistakes That Lead to a Lower Credit Score

Getting a loan or a new line of credit is usually subject to a 3 digit-number known as the credit score. And although it is not the only indicator used by banks and other lenders, your score weighs heavily on your financial health. So, what are the common mistakes that lead to lower credit score and how can you avoid them?

1.  Missing or Delaying Payments

Since your credit score is an overview of your financial undertakings up to the point of applying for a loan, how you handle existing debt matters. Delays or late payments on other loans or credit card installments will affect your score negatively.

Up to 35% of your credit score is determined by your credit history. This calls for timely payments, and where that is not possible, negotiate with your lender for fairer terms to ensure continued payments. Luckily, the moment you restart regular payments, your score starts to improve.

2.  Over Utilizing Your Credit

As earlier noted, you need to pay your debts on time for your credit score to stay high, but the amount of credit you use matters. Known as credit utilization rate, this is the ratio of your credit card debts divided by the amount of credit that is available to you.

The ratio is expressed as a percentage and the higher it is, the worse your credit score gets. Of your total credit score, 20% is determined by this ratio.

Tip: Whenever possible, only use up to 30% of your credit to ensure that your credit utilization ratio remains low.

3.  Having no Credit Lines

As a follow-up on the second mistake, you may think that having zero lines of credit will make your score high. Unfortunately, that would be unwise. Remember that your credit score is derived from your credit history. Without any history to look at, there will be less information for accurate analysis and your score will be low.

4.  Having Errors in Your Credit Report

Reading your credit reportErrors, whether clerical or fraudulent, are some of the common mistakes that lead to a lower credit score. Avoid such mistakes by checking your credit report regularly and disputing any errors. On the upside, credit reporting bureaus are obligated to furnish you with a free report annually.

Also, unlike when a lender requests your credit report which can affect your score adversely, checking your own report has zero effect on your score. Besides, monitoring the report helps you to keep track of any payment that you might have missed. So, check your report periodically and ensure that you can account for all entries.

5.  Closing Your Credit Facilities

After you have paid off a credit card or loan, what comes next? Choosing to close the credit line is a huge mistake. Essentially, you will be erasing a good history that speaks to your ability to repay debts. Particularly, if you were repaying your monthly debt installments on time, then that history needs to be on your report.

Also, closing credit cards lowers the average age of your accounts, which in turn lowers your credit score. Known as credit age, this is the average time that your accounts have been active, and the higher it is, the better your credit score will be.

15% of your FICO credit score is based on the length of your credit history.

Conclusion

A low credit score can deny you anything from a mortgage to a new credit card. A bad score also means high rates and other stringent terms on a new loan. You can keep your credit score from dropping by avoiding all of the above common financial mistakes.

For credit repair and financial advice, contact Credit Absolute for a free consultation. 

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Ulysses Martinez
Ulysses Martinez
21:06 05 Jun 20
Credit Absolate is helping me get my credit score up. They have done by far a fantastic job. I couldn't be more happy with the experience and the customer experience is phenomenal as if your part of the family. They make sure you understand your credit usage and the educational videos are very clear. They are changing my life around. Just being with them for 2 months I got my score from poor to fair and dropped of some accounts from my cresit report. I cant thank them enough. Truly a success story
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They are amazing! Not just Derk but the whole team is great. The videos they provide are so helpful. They just don't help you improve your credit score, they also teach you how to manage your credit score. If you have bad credit contact them 1st before you even start trying to fix your credit on your own!!!
Keith Russell
Keith Russell
23:40 29 May 20
Easy to work with. Very fact based and focus on teaching me how the credit scoring system really works. My credit score increased by 100 points. Best investment in my credit worthiness. Great customer service, this is the real deal.
Fanisha Vela
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This is a wonderful team to work with. They have made the process so easy and efficient. Results seen within the first round of action!
Brandon Dickinson
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01:04 26 Mar 20
What an awesome team. They work hard and get things done. My credit has jumped amazingly and the coaching videos are very informative to every detail. Would recommend this company to anyone looking to better their credit.
Bre Udave
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Steven Lasseson
Steven Lasseson
14:51 28 Feb 20
I've tried a few other credit repair companies and Credit Absolute has provided the best service I've come across. In just over a year, they were able to get numerous items removed from my credit report. The process is simple, the staff is easy to work with, and the results are everything you'd hope for. If you are looking for help in your journey to financial freedom, do yourself a favor and give Credit Absolute a call.
Kade Deeyor
Kade Deeyor
21:51 19 Feb 20
Credit Absolute has been a huge help for me. Since the beginning I’ve seen an enormous increase in my credit score. Felicia and Leslie are especially helpful, concise, and very informative. They both always get back to me within minutes if I have any questions or concerns. I would highly recommend Credit Absolute to anyone seeking a better understanding of how Credit Scores actually work or if you’re looking to increase your scores.
Phuong Mai Pham
Phuong Mai Pham
17:56 13 Feb 20
Credit absolute has helped me tremendously over the past few months. My scores for all 3 credit bureaus have increased by 50+ points. I appreciate the education on credit. I am now much more knowledgeable and strategic about when I should and should not use my credit cards. I look forward to my progress as my goal is to purchase a home by the end of the year!
Doug Donaldson
Doug Donaldson
06:13 21 Dec 19
I noticed a few changes on my credit report that had lowered my score which concerned me and after looking at reviews online I decided to set an appointment with Derek at Credit Absolute. I was fully expecting to spend hundreds of dollars for his advice on what I should do to get it back up to where I had it. After consulting with him and looking in depth at my report, he gave me some tips and helped me understand how the 3 bureaus work and what I could do to increase my score. Best of all..... he didn't charge me a penny. Derek is an honest guy, running an honest business, and if you are looking to build your credit score then he is the guy to turn to. It was about a year ago that I met with him and my score is up over 90 points. 10/10 would recommend Derek at Credit Absolute!
Ashley Krolak
Ashley Krolak
21:58 25 Nov 19
Thank you to entire team at Credit Absolute! We have accomplished so much in a short amount of time. They have helped my whole family increase our scores. They are organized, helpful and get the job done all while teaching you helpful hints along the way. I highly recommend this company for any credit needs.
dan uyematsud
dan uyematsud
21:29 13 Nov 19
Simply the BEST!!!!!!! Derick, Felicia and Becky are extremely good at their job. They work very hard to teach one how to improve their credit as they work very hard on their end to build your credit. I am very pleased as I see my credit score increasing in a short period of time. Thank you again, Dan U
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nestor victore
22:14 04 Nov 19
You guys have done an amazing job, I'm very happy with my score has improved over 100 points. I'm happy with you guys services and help, thanks.
Tina Abbott
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02:07 01 Nov 19
My experience with Credit Absolute has been nothing but wonderful! The entire staff are very knowledgeable and understanding. Felica is the one of the nicest people.
Christopher Moore
Christopher Moore
15:10 03 Oct 19
Communication with Derick and the team couldn't be better. I spoke directly to Derick and he was upfront, honest and didn't waste time. I would certainly recommend Credit Absolute to anyone who is looking into credit repair. They'll give you an honest overview of where you are and what they can do to help you reach your goals!
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David Burgess
19:02 20 Aug 19
Derick and his team have been extremely helpful and informative throughout this entire process. I would recommend to anyone who wants/needs to repair credit quickly! Worth more than the money without question!
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steve moore
23:32 16 Aug 19
Derick and his team were awesome! I would highly recommend their services if you are looking to refurbish your credit score!!! +A all around for his team and the willingness to help me out !
Zacary Roberts
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03:00 26 Jul 19
Felicia helped me out so much, the company is professional l, but they treat you like your their only client. They are thorough and honest and my credit score has gone up remarkably ever since I started working with them. Thank you so much!
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18:50 25 Jul 19
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15:37 25 Jul 19
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19:35 18 Jul 19
They have been great to work with. Going on 3 months now and my score has taken a huge jump. I've had items removed from my credit and every month we go over our strategy to maximize the improvements. Highly recommend :)
Baron Adelmann
Baron Adelmann
21:59 26 Oct 17
Derick and his team have helped me tremendously! He explains the process of improving your credit and does all of the work for you! My credit score has improved drastically and I know that I couldn't have done it without the help of Credit Absolute. Because of them, my business has continued to thrive in a way I never thought possible. Thank you Derick and the Credit Absolute Team!
Gabriela Lovelace
Gabriela Lovelace
23:17 30 Jun 17
I want to thank the wonderful team of Credit Absolute for all the work they did in help me clean my credit! They have teach me how to keep my credit clean and how to make it grow! I will be their customer for life and I recommend to anyone who needs help with their credit! Credit Absolute you are awesome!!!!
Sho Sho Smith
Sho Sho Smith
22:31 16 Feb 17
Derek just made my day when I thought my credit was being compromised due to a balance on my late husband's credit card. He checked it out my credit health and assured me that I lost no points and the balance was forgiven. Great news! He gave me pointers on how to get my credit score even higher to put me into the premium level and coached me on getting back on my feet, credit-wise, after my husband's death. A great experience!
Vanity Hernandez
Vanity Hernandez
20:15 19 Jul 16
I was referred to Derick when my credit score dropped 3 points as I was in the process of trying to get a mortgage loan. Derick gave me GREAT advise and also helped confirm all the credit myths I have overheard on how to improve your credit score. Not only did he give me advise, he not once tried to have me hire him like others usually do. Derick was genuine and that's hard to come across with business. :)
Ian Farruggio
Ian Farruggio
19:29 05 Jul 16
Derek was completely professional and offered helpful suggestions to help me improve my credit. He was honest, in that his services were really not needed and helped to point me in the right direction free of charge. If you have any questions regarding your credit, this is the only place to go!!!
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