It can be a very disappointing event when you get disapproved from a bank loan or credit card. You feel a sense of rejection, a slap of embarrassment; all because of a credit rating. If you are not aware, there are several things that can affect your credit score. Continue reading to learn what things can decrease your credit score so you can avoid them and increase it!


1: No Credit History

Believe it or not, having no line of credit, decreases your credit score! For instance, if you have a credit card and pay it off each month, your credit score takes a hit because there is no line of history. This also happens if you pay cash or use your debit card for everything. Credit lenders want to see how you manage your money and if you can handle paying back amounts. If you have little or no debt, they won’t know if you’re a good credit risk or not. Buying a used car and making the monthly payments on time, every time can raise your credit score significantly.


2: Late Payments

Missed or late payments can really mess up your credit score. Missed payments ALWAYS show up and significantly drop your credit score each time it happens. It takes awhile to recover from these mistakes, but sometimes catching up on payments or paying off the entire balance will convince lenders to remove the late or missed payment note.


3: Hard Inquiries

Whenever a person checks your credit score, a note is made by the credit reporting agency. Hard inquiries often lower your score up to twenty points. They can happen when you apply for a credit card, apply for a job or apply for a loan. If you constantly try to get more credit, lenders view it negatively.


4: Decrease in Payment

If your income suddenly drops one month, it immediately gets picked up from your credit agency and decreases your score. This is because the credit amount you are given is based off of your annual income. Lenders use a  debt to income ratio to calculate your credit amount. When your income drops suddenly, a healthy ratio now looks poor. The only way to change this is to increase income or reduce debt.


5: Filing for Bankruptcy or Foreclosure

Initially, these will not affect your credit score. Instead, they give you a clean slate. However, you will have zero credit for the first seven years after filing. However, there are credit card companies that specialize in working with people who have gone through these financial difficulties. Here at Auto Center of Texas, we will also work with you even if you have a bankruptcy or foreclosure on your credit report. We can help repair your credit!