Your credit history will show if you are making payments on time and if you know how to manage your finances. It will also show how responsible you are when it comes to paying your bills. It also determines if you’re financially healthy. And having a good credit score will allow you to take a loan quickly, purchase a car, or take out a mortgage loan. But not everyone has the ability or the financial capacity to pay their bills on time, which is why some will miss their payments not once but many times more.
If you miss a payment, it can already ruin your credit history as it reflects on your account right away. Lenders will most likely deny your loan application if they see that you have a low credit score. In cases like these, you can still work on building it again through a second chance credit card no security deposit at CreditBono. But what are the other reasons for a low credit score? Let’s find out here!
You Got a High Balance on Your Accounts
Even if you pay on time, you still need to think about the balance you carry on each of your accounts. Another factor that can influence your credit score is the credit utilization ratio, which is why you should aim to use no more than 30% of your card’s limit. So, for example, you have a low credit limit, and you use that to pay for your new purchase. You need to pay it down before the next month, or else your score will suffer.
Errors that Go Unnoticed
Another reason you must have a low credit score is because of an error at the end of the credit card bureaus. That’s why you must request a report each month to check your credit history for yourself. An example of an error is that late payment even though you know you paid on time. So if you think that you should be having a higher credit score than what you have right now, make sure to check it out right away. It’s worth noting that the credit bureau has 30 days to investigate your claim.
You Applied for a New Credit
If you apply for a new credit account or a loan, the bank or financial institution will think that you’re at significant risk of not paying on time or as needed since you have many other financial obligations on your belt. Higher risks mean you get to suffer for a lower score, which is why you should not apply for a loan or a new credit all the time to avoid affecting your credit history. If you don’t need it, you don’t want it. So if you think that’s a reason for your low credit score, then it’s time to take a break from applying.
