A good credit score is really important if you want access to the best features a credit card has to offer. On the contrary, a bad score can limit your access majorly. If you find yourself in the second pack, it’s probably because of one of the reasons mentioned below
You are missing payments frequently
Missing your payments is the foremost cause of having a low credit score, says professionals at cedars business services. You might miss the payment as the thought of conducting the transaction has completely escaped your mind, owing to your busy life.
But by the time you realize that you have missed the date, it will have already made a negative impact on your score, even if it is just delayed by a day. The best way to avoid such an accident is to set payment reminders on your calendars. Remember, your payment history accounts for the maximum in your FICO score that is 35%!
You are paying less than the minimum
All credit cards require you to pay a minimum amount at the end of each billing cycle. With the fragile economic status all of us enjoy, there might be periods where you are not able to pay this minimum balance. And that is when you are under the fear of getting called by a debt collector like cedar financial.
Most people think that paying some amount is better than paying nothing at all. Thus, they tend to pay whatever amount they can afford at the moment. This will, however, in no way help save your credit score.
If you do not pay the minimum amount, it doesn’t matter if you have paid a part of it, your score will be damaged nonetheless. So, in case you find yourself in such a situation, your best bet is to contact your issuers and explain the scenario to them.
You are avoiding payments during a dispute
Every year, thousands of credit cards get stolen physically or their information is stolen over mediums such as a phone call. If such a fate befalls you, inform your issuer the very instant you suspect that your card is being misused.
This will save you a lot of trouble at the end of the billing cycle. However, if you fail to inform your issuer of the theft, or realize that unauthorized transactions have been made only after you receive the bill, do not panic.
There are laws everywhere that ensure you don’t have to pay any amount that has not been transacted by you. In the US, this law is governed by the FCBA, Fair Billing Credit Act. However, you can just inform the issuer and they will look into the matter.
Some people try to act clever and use such an occurrence as an excuse to refuse payment for the entirety of the bill. While you are exempted from paying the amount that you have not spent, not paying the amount you are liable for will greatly damage your credit score. Never refuse to pay up the amount that you have legitimately spent.
And never lie about the transactions you have made as it can land you into serious legal trouble suggests debt collection companies like cedars business services. Visit here to know more about this.
Closing an account that has a high credit limit
More and more people are issuing credit cards every year. To gain maximum customers, issuers are constantly coming up with lucrative offers. You might come across an offer that you feel is better than the current one you are enrolled in or perhaps, you might simply feel that a particular credit card is of little use to you and might want to close that particular account.
Remember one thing though – shutting down a credit card, especially one that has a high credit limit, will negatively impact your credit score as it will lower your credit utilization ratio.
Authorizing access to someone who overspends
You might be having a good credit score for the moment and thus, might decide to lend a helping hand to a member of your family or to a friend by providing them with access to your credit card or by adding them as a user with your issuer. However, if you are not careful as to who you give access to, your credit score will take a massive hit.
If the authorized person has a habit of overspending, your credit limit will be extended and your credit score will be reduced. Thus, whenever you authorize access to someone, make sure that the person is responsible enough to not overspend and damage your score.
Foster these habits, even after you have built a good credit score. You need to maintain the figure life-long to create an unshakeable standing.