Your credit performance is one of the most essential factors in your financial life. It enables the bank to decide on whether to give you a loan or a credit card. We might not think about our credit ratings as often as we should, especially when we are out there making impulse purchases with credit cards or money that is designated for other things.Image displaying Credit Cards

It is important to know what types of things improve your credit score, and chances are you already know various methods, but are you aware of the things you can do that negatively affect your credit? While trying to figure out the most important things to help you in building a credit score, you should also find out the actions that could hurt it, which include the following:

1. Late payments

Your credit score is partially based on your debt payment history. How your creditors react to late payments can affect you for months or even some years to come. The following are the effects of late payments:

· You may be charged a late fee by your creditor, which will affect your next billing statement.

· You may experience an increase in the interest rate, which leads to increase in your finance charges, making it costly to carry a balance.

2. Failure to meet the legal obligations of a loan

Any default on a loan goes to the consumer’s credit record and stays filed for seven to ten years. It is important to avoid defaulting on a loan to prevent decrease in your credit score.

3. Failure to use your credit cards

Most people have no problem using their credit cards, but for those who have them and don’t use them, it may cause the company to take action. Having a credit card which has gone for a long period of time without any ongoing activity, may result to the closure of your account. This is not very common, as credit card companies want you to use their credit, but it can occur.

4. High balances in your credit card

Many can relate to having high credit card balances. You might not think you’re spending a lot via credit, but all of those little purchases add up for sure. Before you know it, you’ve got a humongous debt and you’re not sure how to go about paying it off. Having high balances in your credit card results in an increase in your credit usage, which in return decreases your credit score. Your income to debt ratio is important, so do your best to keep your consumer credit as low as possible.

5. Failure to pay

Lack of payment is worse than paying late. When you ignore your credit cards or loans, you automatically get charged a late fee and your interest rate can increase as well. If you absolutely have to miss a payment, give your creditor a call and talk to them about waiving the late fee or possibly changing your due date. If you’ve temporarily run out of money, it shouldn’t take you long to get back on track paying on time.

Your credit goes up or down based on the information recorded on your credit report. Any type of loans that you have, it is important to make payments on time and keep your income to debt ratio at a workable ratio. Should you run into financial problems, give your creditors a call to discuss your options. They may be able to reduce your interest rate or waive a late fee. It never hurts to try. For more information on how we can help you with this, visit our What We Do page here: