It is advisable to pay your bills on time. Why does one have to do this anyway? Ideally, the idea behind paying your mortgage and credits on time is to maintain a good credit record, which comes a score. Failure to settle your bills on time results in a credit score, which limits the amount of loan you can get.
Unfortunately, most people realize the need to maintain a good credit score only when they are looking for a loan. In case your credit score does not allow you to get what you want, it is high time you sorted things out. The best way to go about this is by looking at this credit restoration service review. Besides that, here is a list of things that could hurt your credit score without you knowing.
Going cash only
Making your transactions only in cash is a good way to remain debt free. However, it can also have an adverse impact on your credit score. This is because credit scores are calculated based on how you can effectively deal with your loans. As such, going cash only does not offer any information on your ability to deal with debts.
Lack of diversity of loans
Having loans from different financial institutions is good for your credit. Unfortunately, most people confuse this by having multiple credit cards. The credit bureau is only able to tell about your ability to manage by how you can manage different loans. With various loans, purpose to make timely payments and see your credit score improve.
Closing a credit card
At times, settling credit card dues can be difficult. In this regard, when most people become financially sound, closing their credit card becomes a top priority. As much as it is the right decision, it can act against your credit scores because most credit bureaus look at your credit status, and how you handle it when calculating your credit scores. With a poor credit score, closing the credit cards denies you the opportunity to improve it.
Reducing your credit limit
When it gets to a time when you see the need to reduce your debts, most people request for a reduction in credit card limit. Unfortunately, this restriction also reduces your credit score since you have decided to reduce your credit limit.
Many factors can hurt your credit scores without you knowing. As such, you need to have an awareness the effects each financials decision has on your credit score. As you manage your debts, look for debt management plan that does not affect your credit score.