Little Know Causes for Bad Credit


Most consumers are responsible – the kind who pay their bills every month and never borrow more than they can reasonably pay back. However, even the most responsible person who feels that he or she is excellent with personal finance can find him- or herself with bad credit. The reasons may be surprising, and not all of us are aware of just how much can have long-term effects on our credit reports. Here are just a few little known causes for bad credit.

Persistent Late Payments

While most consumers know how missed bill payments can negatively impact their credit reports, many don’t know that persistently paying their bills late can also have a detrimental affect. Paying a day or two late once in a while won’t be fatal, but even if you miss your payment by just one day each month, it can play a huge role in watching your credit rating plummet.

Too Many Credit Applications

Having too many credit cards or too many lines of credit can ruin your credit. Even if you pay each off each month, on time, it still makes you look like a risk to other lenders. With the higher debt you could potentially have, the worse your credit can be. You may feel responsible enough not to max out each card or each line of credit, but lenders don’t always think that way. Limiting the total credit balance available to you will go a long way in making you look more attractive to other financial institutions.

Maxing Out Your Credit Limit

Be sure not to limit yourself too much when it comes to credit cards, however. If you find that you are constantly maxing out your credit card, you will look like a credit risk, causing your credit rating to fall. Even if this limit is paid in full each month, it still indicates to other banks that you could potentially miss a payment, making you a lending risk.

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