Factors You Don't Know That Hurt Your Credit Score

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Building up a credit score is essential in applying for a loan. And yes, building up a good credit score is much more critical as you go on in your credit score building journey, whether it is for future usage such as personal loan application, car loan, or just only getting a new credit card.

Yet you ask yourself what are the possible reasons that will hinder you from building up a good credit score. As you might have already known, late or delay loan repayments have a high percentage in reducing your credit score. But there are still minute, yet vital factors that you don't know could actually hurt your credit score?

Learn more about these factors to help you build a good credit score and encourage you to be more careful about your future applications.

1. Applying for too many credits.

Understandably, you need extra credit, but applying for too many cards in a few months can hurt your credit score drastically. This is due to multiple hard inquiries a lending company performs to review your credit history.

Such action can be understood by the lender that you are desperate for a credit, which is a bad impression.

Every hard inquiry performed to review your credit history it costs you five-points in your credit score. And multiply it for how many applications you have done will result in a painful score reduction. Remember that your credit score is the main factor that a lender will check to have your loan approved. Also, it will be the gauge of what interest rate you will be granted.

So be careful in applying for too many credits and be mindful if it is worth taking.

2. Hard inquiries.

As mentioned before, hard inquiries cost you a five-point reduction in your credit score. So, if you are already at a fair level credit score, you might be having a problem if you continue to apply for a new credit again. Though there are companies that perform soft pull on your credit reports, hard pull inquiries are the most performed.

If you are having a problem with your current credit score due to multiple hard inquiries being stacked up, don't fret as there are still subprime personal loan companies that grant a loan to below fair credit scores. Your credit score is called subprime.

To have a better vision, here is the credit score categorization that many lenders' refers to:

  • Exceptional –A score over 800
  • Very Good –A score between 740 and 800.
  • Good –A score between 670 and 740.
  • Fair –A score between 620 and 670.
  • Subprime –A score between 550 and 620.
  • Poor –A score lower than 550.

3. Short credit history or having no credit at all. 

They say that having no credit is like a safe spot for an individual since you don't owe anyone money. But technically, having no credit is just as bad as having a stacked up credit repayments. If you don't have any credit record, your lender doesn't have anything to refer to or to review if you are a good payer.

As for credit history, it is understandable that a younger person will likely have a shorter credit history age compared to older ones. But a good credit history, even in a shorter time, will have a good effect on your credit score.

4. Errors on the credit report.

You might be so confident that every time you have made your loan repayments to a particular lender, they will report everything and have your credit report updated. Unfortunately, when you are about to apply for a new personal loan, you have noticed that there are many errors and mistakes on your credit report, thus resulting in a lower credit score.

Checking your credit report might be an extra errand, but it should be done regularly so you can dispute any errors found in your report. Credit reporting agencies inevitably make mistakes, and it will end up causing you trouble, so be proactive in having your reports checked from time to time.

5. Collections and charge-offs.

Delay repayments can happen due to different circumstances, but don't let a third-party collection agency come to you. If such a situation arises, a drastic credit score reduction will occur. So never disregard payment reminders and bills if you don't like to have your credit score reduced by a chunk.


Establishing a good credit score will take some time as it requires effort, diligence, and full responsibility. You don't like to have your credit score reduced to reach a poor score and have some trouble with your future loan application. Thus, watching out these factors will help you to be mindful of your actions and be more careful in applying for new credit.

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