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By: Select Preferred Network

 

Strange Things That Affect Your Credit

Most people are unaware of all the things that affect their credit; this is understandable because many of the factors that make up your credit are confusing. However, some can also be strange. You may be doing what you think is the right thing but still end up with poor credit because of these strange factors.
Today, we will discuss some of the strange things that affect your credit to help you better understand what is happening to your credit score. 

Strange Things That Affect Your Credit

Here are some strange things that affect your credit. They will help you understand how you can prevent them from affecting your credit. 

 

Evading Credit

It stands to reason that if you have no debt, no credit cards, and no history of credit, your credit would be immaculate. Unfortunately, this is not the case at all. If you evade credit, you have what is known as a “thin file,” which means that potential lenders have little to no information on your credit history and how well you manage credit. This is true even if you have held a stable job for years. Evading credit for any reason will lead to a bad credit score. 

Errors Made by Others

While your credit is yours alone, strangely enough, mistakes that other people make can affect your credit too. Your credit report is not made by you, and it often contains mistakes made by others. These mistakes tend to affect people with common names.
Your credit report may contain details of another person with a similar name. This can harm your score, and it is best to obtain and check your credit report every quarter and request all corrections that may be harming your score. 

Hard Inquiries

Every time you start a new utility service like gas, landline, or cable television, or every time you take advantage of a credit offer, the provider runs an application for a credit check, which is a hard inquiry into your credit history. An inquiry should not be a problem. However, each hard inquiry causes a slight drop in your credit score, and creditors even have limits on how many hard inquiries can be run for approval. 

Debt Utilization Ratio

Everyone knows that excessive debt is bad for your credit score, and we have just learned that evading credit is also bad; this is strange because it seems like a no-win situation. So, what gives? Much of your credit score depends on your debt utilization ratio, which is the amount of credit you use against the amount of credit available to you. A good borrower keeps it below 30 percent, which means not exceeding 30 percent of your total credit limit. The best debt utilization ratio comes from keeping it under 10 percent. 

 

Conclusion

Having emergency funds will save you from different undesirable situations. Moreover, you will live confidently because you know you have money on the side. However, money loses its value against inflation. Hence, most people prefer to invest in real estate because land appreciates over time. Incase of an emergency, people would sell their land and use the money earned to pay off debts or home renovation bills. So, if you aim to live a debt-free life, you need to have an emergency fund. Otherwise, you will be asking forloans all the time, which will harm your credit score. 

 

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