5 Hidden Factors That are Killing Your Credit
Everyone knows that having bad credit can make your life hard. A low credit score or a lack of credit history can make it challenging to get the loans that you need to continue your education or buy a home, can exclude you from certain credit offers, and can even potentially make it more difficult for you to find a job if you work in the financial sector. If you have bad credit, you’ve probably noticed these effects firsthand in your life — but what influences your credit score?
Credit is made up of a number of influencing factors, ranging from your payment history to the amount of money you put on credit cards each month. But did you know that there are other sneaky hidden factors at play that may be lowering your score? Some unknown factors that can lower your credit score and affect your ability to get a PAC car loan include the following:
Unpaid Parking Tickets
That $50 parking ticket you got last week probably won’t immediately affect your good credit score…if you pay it on time, that is. If you leave a parking ticket, utility bill, library fine, or other debt outstanding for long enough, the debtor will turn your payment over to a collection agency. Debts owed to a collection agency can wreak havoc on your credit score, so make sure you pay your dues in a timely manner.
Collection agencies have a wealth of tools at their disposal that can quickly make your life harder than it has to be. These tools often have a significant negative impact on your credit score that can stay with you for years.
Unpaid Child Support
Divorce proceedings are always an emotionally charged atmosphere for all parties, especially when children are involved. If you have gone through a divorce and now are required to make monthly child support payments, letting them fall by the wayside can not only negatively affect your former spouse and children, but it affects your credit score too.
Unpaid child support is considered a debt to the state. Debts are reported to credit agencies and almost always have a negative influence on your score.
Closing a Credit Card
When it comes to determining your credit score, how much you have available plays an important role. A percentage of your credit is determined by how much of your available credit you use each month. As a general rule, the less you put on your credit cards, the better your credit score will be.
When you close a line of credit by cancelling a credit card, you are lowering your amount of available credit — and even if you spend the same amount of money as you did when you had the card open, your percentage usage will go up. Can’t resist the siren song of that Visa or Discover card? Instead of cancelling it, lock the card away somewhere where you can’t easily access it or leave the card with a trustworthy family member.
There is nothing worse for someone taking money out of an ATM machine than to overdraft your account. Overdrafts can cause havoc on your financial life and will create new problems for you. If you opt for overdraft protection tied to a line of credit, overdraft fees are considered debts and will be reported on your credit score.
Credit Report Errors
Your credit report has an outsized impact on your life — it affects your buying power in ways other factors can’t. So ensuring that your credit report is wholly accurate should be a consistently high priority. According to an FTC report, one in every five Americans has an error on their credit report.
Have you been keeping up with your car loan payments, yet your score is still decreasing? You are entitled to one free pull of your credit report every 12 months from all three major credit reporting bureaus. Check your report for errors to clear up the information in your credit!
If you have bad credit, making regular on-time payments on all of your outstanding accounts will help improve your score over time. However, programs offering buy here pay here in Bucks County, PA can offer you a fresh start and get you the bad credit, low down payment auto loan you need now without waiting for your score to rise.
To learn more about buy here, pay here in Philadelphia, PA, give the team at PA Auto Credit a call today.