Understanding Credit: What Causes Bad Credit?
Let’s face it, you need a good credit score to get anything these days. Landlords and banks will run a credit check for renting an apartment, getting a mortgage, getting a car loan, or any other kind of installment loan. If you have bad credit, it can be hard to get the things you need in life. Do you know what causes bad credit? Read our guide next time you apply for something that requires a credit check.
What is a Credit Check?
Before you can find out what causes bad credit, you need to know what a credit check is. You may be wondering; how do I know whether my credit score is good or not? There are credit score ranges that signify how good or bad your credit score is. For example, 350 to 650 is considered to be a poor credit score range while 720 to 850 is considered to be an excellent credit score range. Don’t worry; if you’d like to improve your credit, there are steps you can take in the right direction. Avoid the following things to avoid bad credit.
Over-drafting your Credit Line
Making large purchases on a credit card without knowing your exact remaining credit line will overdraft your available credit or savings. Along with creating bad credit overdrawing will cause an increase in monthly fees and charges.
Credit Card Debt
With the use of credit cards increasing, the number of card users who cannot fully pay off their cards increases as well. Credit card companies charge monthly fees once an outstanding bill is not paid. The Interest fees will continue to rise as long as the complete balance is not covered. This can lead card users to become overwhelmed by the financial burden. Inevitably card owner may be unable to pay off their outstanding balance. The outcome of these situations contributes directly to a negative change in credit score.
Missing Bill Payments
If you fail to pay off a bill or an installment loan payment on time, it can cause your credit score to go down. This can especially happen if you make it a habit. Delaying your bill payment can also accrue interest charges which make it even harder to make your payment the next month.
If you need an installment loan and think you have bad credit, apply now with AmeriCash Loans. Use our easy application to get next day funding and instant pre-approval online for loans up to $4,000.
AmeriCash Loans and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.