Below, there are several possible causes of a low credit score as compared to your expectation. Credit scores are determined by information in the credit report and therefore things which appear there are likely to lower your score.
Late Payments One of the things that really hurts your credit score is negative payment history, in this case apparent by late payments. Each time you delay the payment of a bill, it is reported to the credit bureaus by the company. This can last for up to seven years, even if the payments are made at a later date. The credit score can reduce by more than 100 points just because of one or two late payments. But when there are several such payments during the year, it has a more severe consequence.
Maxed Out Credit Cards One of the factors that make up your credit score is your credit card balance in relation to your available credit limit. This is the ratio of how much you currently owe in comparison to your total credit limits. It’s advisable to keep your level of utilization below 30% as advised by different professionals in the field. If you have one or more cards that are maxed out up to their limit, that poses risk to lenders and can significantly pull down your credit score. This process can start raising your score, and it certainly makes paying down those cards a good idea.
Defaulted Loans Like other forms of loans, defaulting on credit card payments also result to credit history, although it can be late payment. Defaulting is a situation whereby a borrower has been unable to pay an agreed amount of money on the loan as earlier agreed in the loan transaction for a long time. When the loans go into default, reported loans include student loans, auto loans, personal loans, and medical debts. Similar to other negative credit information such as late payments, defaults also have a detrimental effect on your credit and they are also reported for a period of 7 years.
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