Elite Realty, LLC
Toni Osterhout, Elite Realty, LLCPhone: (860) 482-4063
Email: [email protected]

Factors That Negatively Impact Your Credit Score

by Toni Osterhout 09/29/2019

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

Toni Osterhout

Toni is an accomplished and experienced realtor serving Litchfield County for over 13 years. She is a full time career professional that is available for you seven days a week for all your real estate needs. She is a part of the Litchfield County Board of Realtors®, CT Association of Realtors®, CMLS®, MLS, E-Pro, and Affordable Housing Committee Member of LCBR 2006.

After earning her degree in Fine Arts and Graphics from NCCC she decided she wanted something more for herself and became a licensed CT Broker. She excelled at completing the Principles and Practices of Real Estate course and Appraisal 1. Toni continues her real estate education by participating in Real Estate educational programs every 2 years for Contract Law, Environmental Issues, Ethics, and Fair Housing.

During her time at Coldwell Banker she achieved Agent of the Month in Listings in 1998 and Agent of the Month in Sales in 2000 as well as the Top 5 in Sales. She was inducted into the International Diamond Society in 2002. Today, she remains in the top 19% of all Sales Associates across the Country.