Have you ever messed up your credit score to such an extent that it seemed hopeless to even try to rebuild it again? How did you even get there?
You may think that your credit score is absolutely irreparable, but there are ways you can determine if your credit score is salvageable or completely corrupted forever.
In this article, you’ll learn about the signs that your score is hopelessly damaged. These signs will also help you determine if your actions today are still negatively affecting your score. Figuring out what you’re doing wrong might help you turn it right before you ruin your credit forever.
Defaulting on Account
The first factor that tells you that your account is in an irreparable state is if you have defaulted in one or many accounts. Creditors don’t trust anyone that has defaults in their accounts. It shows that you can’t be trusted.
If you have one or a number of accounts in default you’re well on your way to having an irreparable credit score. You can’t wish away your debt by just ignoring them as they leave bad marks on your credit report for years.
You can always start paying your defaulted credit today in hope that one day you can rebuild.
Applying For a Lot of Credit
If you apply for a lot of credit in a short time then it will negatively impact your credit score.
Hard inquiries are done in your file anytime you are applying for a loan or credit. These hard inquiries can dent your score up to 10% per inquiry. The inquiry stays on your report for up to two years and will in turn reduce your credit score long term.
When you have a large number of credit applications over a short period of time, creditors see you as unreliable and unable to meet the payments for those debts.
If you fail to make payments on time, you’re more likely to forget that outstanding debt over time.
If you miss a payment, your creditor has to report to one of or all of the three major reporting bureaus. This, in turn, leaves a mark on your credit long-term that will be hard to scrape off.
Missing payments also becomes a habit when you start and with a number of creditors on your neck, a report from each will render your credit score irreparable. Always take account of your credit and make payments on time to immediately start improving your credit score.
Using too Much Available Credit
When you use too much of your available credit, it means that you are dependent on it. Credit utilization plays a huge role in your credit score, around 30% of your score, according to FICO.
Creditors will generally assume that you are recycling debts by taking one debt to pay for other debts.
If you have been or are still utilizing your available credit, you need to get a handle on that before your score becomes irreparable. If you have irreparable credit this may just be one of the factors that played a huge role to ensure that your score is irreparable.
All hope is not lost if you have an irreparable credit score. But, it does mean that it will take you many years of being on your best behavior to raise your score again. It can be done, but you must adopt healthy financial practices to get there. before you can enjoy the perks of credit again.