« What Is A Good Credit | Home | Many Times, Loans That Are »
Why Is My Credit Score
Why is my credit score so low? I pay all of my bills on time and have never been late on anything. This is one of the most common questions asked and there can be many different reasons why your credit score is not where it should be. The most common reason for a below par credit score, even if you have perfect credit, is due to having too much revolving credit. Revolving credit is debt such as credit card debt. If you have a lot of different credit cards and most, if not all, of them are maxed out to their credit limit then this can be a major reason for a low credit score. The ideal maximum credit limit to actual balance ratio is to owe roughly 20-40 percent of what your available credit limit is. An example would be if you have a credit card with a $1,000 maximum limit, to use only between $200 and $400 on that credit card. Another reason for a low credit score could be that you have just way too much credit overall or a poor mix of credit. A person who has 50 different open credit accounts on their credit with balances would be a higher credit risk than a person with 5 open credit accounts with balances. Having a nice blend of credit will help increase a credit score. A nice blend of credit would be to have a couple of revolving credit accounts, an installment credit account (or two), and a mortgage account. A poor mix of credit might be 5 installment accounts (such as car loans, personal loans, etc) and no other open credit accounts. Another reason for a low credit score could be due to the fact that you may not have a long established credit history with aged accounts that have been open for a long time and are still open. Many people make the mistake of closing some of their credit card accounts once they pay them off or if they don’t use them anymore or even if they just don’t want to have the account any longer. This can be a mistake because your credit score is rewarded for long established accounts and penalized if you only have new credit. There are many other reasons why your credit score can be lower than you think it should be even if you have never missed a payment in your life. Consult a mortgage professional if you would like some help on learning more about credit and how to increase your credit scores.
Tags: credit card debt <BR/>No related posts.
Related posts brought to you by Yet Another Related Posts Plugin.
Leave a Comment