What Factors Can Negatively Affect Credit Scores? | Equifax® (2024)

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What Factors Can Negatively Affect Credit Scores? | Equifax®? ›

Multiple credit applications can negatively affect your score, regardless of whether they're successful. This is because each application records a hard search on your report. Try to only apply for credit you're eligible for. Missing payments.

Multiple credit applications can negatively affect your score, regardless of whether they're successful. This is because each application records a hard search on your report. Try to only apply for credit you're eligible for. Missing payments.

A poor credit history can have wider-ranging consequences than you might think. Not only will a spotty credit report and low credit score lead to higher interest rates and fewer loan options, it can also make it harder to find housing and obtain certain services. In some cases it can count against you in a job hunt.

If you make a late payment, miss a payment or pay less than is required by your credit agreement, it all gets added to your credit history. Over time, this could lead to your credit score being classified as 'very poor' or 'poor' by the credit reference agencies that determine how easily you can borrow money.

1. Payment History: 35% Making debt payments on time every month benefits your credit scores more than any other single factor—and just one payment made 30 days late can do significant harm to your scores. An account sent to collections, a foreclosure or a bankruptcy can have even deeper, longer-lasting consequences.

Late or missed payments

If a bill is past due for too long, the bill will likely be sent to a collection agency or reported against you, subsequently affecting your credit score. This will negatively influence your credit score, even if you simply forgot to pay the bill.

Payment history is the most important factor in maintaining a higher credit score as it accounts for 35% of your FICO Score. FICO considers your payment history as the leading predictor of whether you'll pay future debt on time.

What is a negative thing about credit score? ›

Negative impacts to your credit score

Missed payments: This can be everything from loans to bill payments. Defaulting on payments: A default is where a payment over $125 is overdue by more than 30 days and the lender has tried to recover the money. This stays on your credit record even if you repay the amount in full.

Called the five Cs of credit, they include capacity, capital, conditions, character, and collateral. There is no regulatory standard that requires the use of the five Cs of credit, but the majority of lenders review most of this information prior to allowing a borrower to take on debt.

Negative information includes items such as late payments on loans and credit cards, delinquent accounts, charge-offs, accounts that have been sent to collection, bankruptcies, short sales, deeds in lieu of foreclosure, and foreclosures. A single hard inquiry can lower your credit score, usually by a few points.

A low credit score may limit your borrowing options, or make it harder to access credit at all. Many factors contribute to a low credit score, including little or no credit history, missed payments, past financial difficulties, and even moving home regularly.