What Affects Your Credit Score: Understanding The Reasons

Your credit score matters a lot. It is one of the most important terms in your financial report. Your credit report bears the score. It does help you to get financial facilities and credits (loans and more) when it stays high. However, if it goes downhill, then you might notice a problem. 

A low credit score happens when your credit score gets affected. There is a number of reasons for that. A few of them are:

• Delayed or insufficient payment; paying inappropriately 
• Spending more than the credit limit
• Not knowing about the APR (Annual Percentage Rate) and not paying it timely

With a low credit score, you will not benefit financially. You won’t get credit card rewards anymore. You might also have to pay more for it to supply penalty costs.

When it comes to identifying the causes of a low credit score, then the points mentioned above are considered only the tip of the iceberg. There is more to it. Let’s find it out.

Why My Credit Score Isn’t Always the Same?

It seems a little enigmatic right? We can tell you for sure why that happens. As a matter of fact, the credit score is interpreted with different standards.  For example, we have got the credit score standards. We can find it clearly further below considering the points:

• Credit scores are defined as per standards. These standards are characterised by different credit reference agencies. The most prominent 3 are Experian; TransUnion and Equifax. In the UK, most lenders and credit organisations follow Experian
• Your main credit report and score are going to be prepared by the credit card organisation or issuer. They will set the credit limit of your card too.
• Creditors such as lenders might have a different reading on your credit score. It is because they will observe your credit history by considering your credit report. Therefore, you might have a different or an alternative credit score with some of these providers.

How Does Experian Define Your Credit Score?

The experian credit score is the most popular credit score standard used by financial individuals and businesses in the UK. Why is it so popular? It is because it gives you a correct reading of how the creditors or financial departments will view your credit score The score set by Experian is going to be close to what companies will interpret as your credit score.

Experian credit score check is free. It is also very easy to understand because Experian has prioritised keeping the score between 0 to 999.  Do you want to know what is counted as a good and a bad credit score? The following table can help you out.

Experian Credit Scores
Very Good	881 to 960
Fair/ Good	721 to 881
Bad	561 to 720
Very Bad/ Extremely Poor	0 to 560

What Might Be Affecting My Credit Score

As mentioned earlier, there is more than one reason to get a bad credit score. Some of these issues can arise from a lack of knowledge or expertise in maintaining your credit card. It stems from the inadequacy of credit card know-how. In other cases, we have found out extreme financial stress such as poverty; low income; complex finance or cash flow issues lead to a poor credit score. It might get low and you will face some hurdles in the way of fixing it. Let us take a look below and find out what these reasons might be:

• Not Following the Credit Limit

Your credit limit is a set amount. You can use your credit card to buy things or make payments using it as per that amount. If you somehow spend more money than that using your credit card, then you will have to pay credit card penalty fees because you have exceeded your credit limit.

There is another problem here though. If you constantly max your credit card, then lenders might think you suffer from financial difficulties. The same feedback might be possible from lenders and creditors when they will find out you are using your entire overdraft. That is not the right thing to do if you want to keep your credit score in check and useful.

• Opening New Accounts

In many cases, starting off with a new bank account can lower your credit score. It shows you are not okay with the management of a single account. The same issue might also happen if you apply for a new credit card while your existing card has a low credit score. That score might go lower.    

Applying for too many credit cards is not questionable. But, to a very natural extent, it kind of feels that way, don’t you think? If you keep on applying for many credit cards, then credit card issuers might make a hard credit check on your already existing credit score. It might lower the score a bit further for the in-depth analysis.

• Having No Credit History

Let’s say you have come to a lender for a loan. Now, you wait in the queue with your credit history with no considerable details of transactions. The lenders might find it a little odd. Plus, no considerable credit history or little credit history is unfit to explain the causes of a low credit score. On these occasions, reanalysing the credit score can get it low.

• Making Payments Wrongly or Missing Them

Your credit card allows you the privilege of going cashless. But it has its terms. You cannot make the credit card pay later for you. Or credit cards won’t allow you to make payments insufficiently. If you are failing on your payments; you make insufficient payments; or you are making payments late, then you might have your credit score going down.

Such patterns of credit card payments indicate you are using your credit card in the wrong way. Thus, you might have a low score. It can get a little serious with the next point we are going to discuss.

• Not Paying Credit Card Fees

Your credit card is not a free service. Although you can afford cashback credit cards, your credit card always has a reason to be a financial service. They are fees. To begin with, you are to pay your usual credit card fees. Along with that, you are going to pay an Annual fee, which is calculated using a percentage rate often termed the Annual Percentage Rate or the APR.

If you fail to make payments; if you cannot pay the APR; or if you default a credit card fee; then you might be suffering from legal problems. Your lender might file County Court Judgement (CCJ) or similar cases against you until you make repayments.

In this condition, making those pending payments is urgent. The best thing you can do is to fight debt with a fresh debt. Take out loans with bad credit from a direct lender such as us. You can repay your previous lenders and make repayments for the current loan later. It can save you from serious legal problems and the financial complications associated with it.

To Conclude

We are a direct lender organisation and we can help you in the best ways possible. We have been dealing with many bad credit borrowers throughout our professional journey. We even have helped unemployed people in bad or extremely bad credit situations as well. Call us PmLoansDay, and we are at your service all the time.

Do you need a bad credit loan now? Are you suffering from debt? Are you in need of money in unemployment and you also have poor credit? We can help. Apply with us now and we can take care of your finances effectively.