While your credit score will have a huge bearing on your fiscal future, it’s surprising to note how many people remain in the dark concerning the state of their finances.
Nearly half of people in the UK (47%) fail to check their credit report, for example, while just 26% of those that have claim to not know their credit score.
This represents a worrying trend, and one that may make it hard for citizens to buy homes and manage their finances in the future. In this post, we’ll consider five factors that can negatively impact your credit score without careful management:
- The Number of Open Accounts that you Have
We start with the number of open accounts that are listed on your credit report, as this remains one of the most popular scoring factors available to lenders.
Credit scoring models also tend to measure how many accounts feature zero balances, so it’s important to monitor your individual debts and their total value.
As a general rule, it’s better to have more zero-balance accounts than those that are currently being repaid, so keep this in mind when trying to increase your score.
- The Lack of Positive Credit Transactions
At the same time, we’d recommend that you maintain at least one open account that is active and repaid on a monthly basis.
Even the type of bad credit loans featured here can provide a boost to your score, so long as they’re managed well and repaid well within the predetermined time-frame.
- Hard Enquiries on your Credit Report
Whenever you request credit or a brand new loan, a lender will make an enquiry into your history and existing debt levels.
This is considered to be a hard enquiry, and one that leaves a footprint on your credit score and overall report.
Making too many hard enquiries over a sustained period of time can be indicative of increased risk to lenders, meaning that it’s capable of harming your credit score significantly.
- The Presence of Incorrect Address Details
Don’t underestimate the importance of admin when reviewing your credit report, as incorrect address details or mistakes in your history can damage your score in the eyes of lenders.
The same principle applies in instances where you’re not listed on the Electoral Roll at your current address.
This is another popular credit scoring factor, and one that is easily overlooked by people when they apply for loans.
- The Presence of Inaccurate Account Details
On a similar note, the presence of inaccurate account details can also damage your credit report considerably.
In some instances, you may find that negative accounts have remained on your report for too long, as even defaulted accounts should be automatically removed after a period of six years.
By keeping an eye on your report, you can ensure that these incidents do not hamper your report even in instances where they do occur.