Bad Credit Score

Your credit score is a very crucial factor of your financial life. With a poor credit score, taking out loans from banks becomes difficult. Bank representatives are sure to look into your credit report, evaluate your creditworthiness based on what’s on the report, and decide whether to approve or deny your loan application. And while there are now private lenders that offer personal loans for people with bad credit, it remains important that you are aware of the bad practices that affect your credit score.

Late payments or no payment at all. Your payment history is 35% of your credit score, so ignoring your credit card bills either by not paying on time or not paying anything at all will impact negatively on your score.

Charged off accounts. This happens when you fail to make payments on your credit cards for several months. The bank cancels your account and will then demand that you make payment in full.

Loan defaults. Loan defaults mean you have not satisfied your end of the contract, that is you failed to pay the loan amount, including the interest rates, at the agreed upon date.

Poor credit utilization. Credit utilization basically means how you use your credit card. So if you have high credit card balances and have maxed our your credit card, these will both increase your rate of credit utilization and will negatively affect your score.

Acquiring several loans. Taking out several different loans in a short amount of time can also cause your credit score to drop. When you’ve been declined of a loan several times yet you continue to make more applications, the number of enquiries made on your report will also affect your credit score.

Even if these days there are already several choices when it comes to borrowing money, including personal loans for people with bad credit, taking care of your credit score is still important. Having a good credit score is key to becoming a financially healthy individual, and avoiding all the above-mentioned practices that negatively impact credit scores is the first and crucial step.

Credit score is a huge factor that affects your chances of approval, but remember that credit scores may not be the only factor that will affect your chances of being approved of a loan. Especially if you are taking out personal loans for people with bad credit, aspects such as your creditworthiness, ability to pay, and source of income will also help your lender determine whether or not your eligible to take out bad credit personal loans.