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Top 3 Reasons Why Your Credit Score May Have Dropped

It is usually frustrating when you have to run up and down looking to secure a loan. The number one reason why most institutions decline loan applications is when a person has a bad credit score. Below are the top three reasons that may result in a drop in your credit score.

Your Payment History

People who always make their payments on a timely basis have a good credit score as opposed to those that do not. Lenders who include banks and various credit companies will brush over your credit history to calculate your credit score. Payment history is arguably one of the most important factors that you should be put in mind as it has the highest impact on your credit score. Delayed payments are forwarded to the credit bureaus, and this is how they affect your credit score. It is advisable for you to regularly check whether your payments are being reported correctly because late payment may not be your fault.

Your Credit Utilization

More debt in your credit card will amount to a drop in your credit score. If you tend to rely majorly on debts, it is a negative sign to the lenders. Making big purchases by using your credit card may impact negatively on your credit score as it may record a drop. It is always good for you to monitor your current usage of the credit card and perhaps set limits. Monitor your credit report and check if there are errors recorded, maybe due to some misinformation.This happens often and it is your obligation to make sure that everything is in order.

Undesirable Items Featuring in Your Credit Report

Bankruptcy and foreclosures are examples of undesirable items in your credit report that make your credit score to drop drastically. It is advisable for you to pay for all your accounts. This does not only mean the credit payments, it also includes the non-credit. Failure to pay may affect your credit score negatively when a collection agency compiles and adds it to your credit report.

If you have a low credit score and need a car, contact the team at Avis Ford Credit today.