When it comes to factors that hurt your credit score, you’ve probably heard about foreclosure or bankruptcy. However, these are only the big items. There are other items that can hurt your credit score just as bad and you probably won’t notice them as much and that makes things only worse.
However, it’s never too late to learn and we’re going to help you with that. We’ve compiled a list of the things that can damage your credit score. These are mistakes you’re likely to oversee. However, there are no excuses now.
A payment that’s been missed
It doesn’t matter whether you’re missing a payment for the first time, it can seriously affect your credit score. Even if you’ve had a stellar record, a single payment issue is all it takes to ruin that record.
According to a FICO study, a payment delay of 30 days can cause a credit score reduction of 90 to 110 points. This makes things worse if your credit score is already average. Plus, that kind of an error stays with you, to be more specific, 7 years from the original date of record. You could course-correct and see your scores jump back over time. However, prevention is better than cure, so, don’t delay payments in the first place.
Modification of loans
This is a fairly popular course of action opted by those facing issues of foreclosure or default. However, it can cause your credit scores to drop significantly, estimates suggest a drop of 100 points. Also, if there is a trial period attached to your loan modification, lenders will keep reporting 30-day delays in payments.
A genuine error
This is quite likely to happen. According to a Federal Trade Commission report from 2012, 1 out of 5 Americans has credit report errors. This includes everything from misspelt names to wrongly reported missed payments. The sad part is you can't avoid errors as such. Even so, you could keep an eye out for such errors by constantly monitoring your credit reports. If you do spot errors, make sure you take up the issue with the respective credit bureau.
One of the strange things about credit scores is that the higher they are, the more risk you face if something goes wrong. This is because credit bureaus use a scoring model that sees negative entries as atypical for those who have consistently good credit scores. This indicates that the concerned person might be heading for major financial trouble.
So, if you’ve got a high credit score, don’t feel too proud. The slightest mistake can bring the whole thing down.