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What Are the Factors That Can Lower Your Credit Score?

Fear and trepidation, that's what most people feel while waiting for the results of their credit score. I even get sweaty palms, and I'm a mortgage agent. Because that score may make the difference in the house of your dreams verses living with your parents. So of course one of the most FAQ I hear is “What are the factors that make your score lower?”

According to TransUnion there are four things that can mean trouble for your credit score.

THERE ARE TOO MANY CONSUMER FINANCE COMPANY ACCOUNTS ON YOUR CREDIT REPORT. Having too much available credit can sometimes harm your credit score. Lenders may feel that you have the ability to spend more than you could potentially pay back. You might want to consider closing a few accounts or asking to have your credit limits reduced. Avoid closing too many accounts-especially the oldest accounts on your credit profile-because it could harm your credit score.
YOUR ACCOUNT BALANCES ARE TOO HIGH. High levels of debt can signal to potential lenders that you are spending more than you can afford. It is a good idea to use your credit cards regularly but remember to keep your balances below 35 percent of your available credit limits. If you have balances above 35-50 percent, you could see your credit score start to drop.
THERE IS NOT ENOUGH RECENT REVOLVING ACCOUNT INFORMATION ON YOUR CREDIT REPORT. Using your credit accounts regularly is an important part of building healthy credit. Lenders will be able to better evaluate your credit worthingess if there is more data about your payment and spending behaviour on your credit report. Using a credit card to make a few purchases each month may help improve your credit score.

These things really work! I've seen people gain 70 point in less than 4 months. Next time I'll discuss the benefits of choosing a mortgage agent.

About the Author

Veronica Urch works as a mortgage consultant for Real Mortgage Associates. Her office is located at 515 Park Rd North, Brantford. She is registered with CIMBL, the Canadian Institute of Mortgage Broker and Lenders. To make your rate the best rate, call Veronica at 519-865-2384 or email at veronica@rmabrokers.ca.