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5 Things you Didn’t Know Were Killing Your Credit Score

April 26, 2016

You may not think about your credit rating very often – but when it comes to applying for finance, this all-important score can make or break your chances of securing a good deal. To prevent a poor credit score killing your ability to get credit, it’s key to keep an eye on your rating through regular credit checks. That way, you can put yourself in the best possible position, should you ever need to borrow money in the future.
When you apply for finance, lenders will run a comprehensive credit check to calculate your suitability. Credit reports aren’t limited to a list of late payments – and at The Car Loan Warehouse, we’re giving our readers some insight on things that could be killing your credit score without you knowing. That way, you can start rectifying your poor credit rating today.

killing your credit score

  1. Missed payments

It goes without saying that missed payments for credit cards, mortgages, loans, utility bills and other standing expenses will have a detrimental impact on your credit score. Here’s where it gets a little more serious though: missing just one payment will show on your record for six years, meaning you’ll need to work hard to undo the damage resulting from this black mark.

  1. Collection items

If you have a collection item against you, you’ll understandably believe that it’s more important to pay these debts off first and, in turn, improve your credit score. However, while it’s important that you pay back the money you owe, when your information has been passed on to a collection agency, the damage to your credit score has already been done. You’re better off keeping your active debt repayments up-to-date and chipping away at the collection items one by one.

  1. Number of credit cards and usage

When lenders check credit scores, they look at the credit available to you as well as how much you use. It’s a common misconception that not having a credit card, or having one that’s used rarely and paid off on time, is the way to go – but this can actually have a negative impact on your credit score. Of course, an over-reliance on credit cards is also dangerous – so it’s recommended to keep usage around 20% making sure you’re regularly making payments, but also making use of credit available.

  1. Mistakes on your credit report

You’d be surprised how many people find mistakes or inaccuracies on their credit report to the detriment of their overall rating. When you get a credit check, keep an eye out for anything that doesn’t seem right and make sure you dispute discrepancies with the credit report agency – if it’s a genuine mistake, it will be removed permanently.

  1. Applying for lots of credit

If you’re looking for credit, it’s advised to stagger the number of applications you make rather than applying all at once – as each time you apply to a lender, it shows on your record. If you simply want to compare interest rates, for example, you can ask your lender to run a ‘quotation search’ – which doesn’t register as an actual application on your report and won’t have a negative impact.

If you’re wondering how you score, now’s the time for a credit check. Head to Experian for a full report and take the first step towards reviving your credit rating.

If a poor credit score is getting in the way of finding a car finance deal, we can help. At The Car Loan Warehouse, we specialise in bad credit car finance and respond to every application within 60 minutes.

Ready to get started? Apply now or try our online car finance calculator for an instant estimate today.

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About The Author

Jon Le Roux is co-founder and company director of The Car Loan Warehouse. Being a mad engineering and motorsport enthusiast, I spend more hours than is healthy, watching, reading or talking about cars, boats, motorbikes…..basically anything with an engine.