Factors That Negatively Impact Your Credit Score

by Robert V. Ortiz 08/11/2019

A credit score is an essential factor that determines how creditworthy you are and how much interest you should pay on loans. If you have an excellent credit score, you will pay a lower interest rate on loans and credit lines all through your lifetime. Apart from reducing your interest rate, a good credit score helps you save more money that should have gone into interest payment. 

Your credit score is also a basis on which lenders determine if you are creditworthy. Other businesses have now adopted the credit score method as a basis to make decisions about you. Firms like the insurance company and utility company are among the few who have chosen this appraisal style. Having a bad credit score leaves you in a bad position. To determine factors that affect your credit score, read through the points listed below.

Late Payment History

Having a history of late payments would affect your credit score by about 35%. Payment history is the most significant factor that determines your creditworthiness. Payment history like bankruptcy, tax liens, collections, foreclosure, and charge – offs would destroy your credit score – making it almost impossible for you to be creditworthy. 

Level of Debt

Debt utilization ratio makes up about 30% of your credit score. Having a huge debt will negatively affect your credit score and also increase how much you would pay on the interest rate. FICO credit calculator determines your credit score by calculating...

- Your credit balance ratio against your credit limit.

- Total debt you incur.

- How much loan balance you have left as against the original amount loaned

Defaulting

A single default on your loan repayment can leave your credit score in shambles. A person with a high credit score that declares bankruptcy loses up to 250 points, a foreclosed home would lose 200 points off the credit score of its owner. This information remains on your file for as long as seven to ten years. 

Unemployment

Being unemployed for an extended period puts you in the wrong place. It’s something everyone goes through at a point or the other in their lives. Taking money out of your unemployment benefit will leave a slightly negative impact on your credit score. You might be wondering why it so? Credit bureaus do not know you are unemployed; all they see is a reduction in your income without a corresponding increase. It’s advisable you do this for a very short while. 

Having a low credit score is not the end of the world; it’s your ability to work on changing this score that matters. Work with a personal financial consultant to develop a plan to improve your credit score.

About the Author
Author

Robert V. Ortiz

 Sunshine State Tampa, LLC dba Atlantic Coast Equity & Acquisitions is a Real Estate Investment Company in the Tampa Florida area. They do Rehabs, Fix & Flips, Buy & Hold, Single Family and Commercial Multifamily properties throughout the USA. The owner Robert Vincent Ortiz has 21 years in the Real Estate and Finance industry. He was a Licensed Mortgage Broker for 14 years and is currently a Licensed Florida Sales Associate/Realtor® and has been for the last 10 years. He is Certified to do Residential and Commercial Real Estate. Is on the Famous “Coach Cook Team” at KW Commercial in Tampa, Florida and was personally recruited by the Co-owner of Keller Williams (Joe Williams) who saw Robert speak at a Networking event. Robert has personally done over 8,000 BPO Valuations for 35 different Lenders & Asset Management Companies and considered one of the best in the country. He is also a Certified Negotiations Expert and currently negotiates Short Sales for 7 different online Investment companies. He is also a Certified Probate Real Estate Specialist and has been a NOTARY Public for the last 13 years. Robert is one of the Tampa Florida Power Players on “The American Dream” Network TV Show. We are looking to connect with other people in the Real Estate industry. Specialties: Real Estate Investing. Buying and Selling residential/commercial real estate with creative financing strategies. Acquisitions. Wholesaling real estate to other investors.