Are you striving to stay on top of your bills with the least possible debt? These are factors that enable you to live a comfortable life. Though sometimes this is easier said than done. There are a range of factors that become major considerations when it comes to borrowing money whether it be for your dream car or dream home. Chances are you’re aware of some of these. But did you know there are other smaller factors that can impact your credit score and your ability to secure a home loan? In fact, you may be making mistakes that are negatively impacting your score without you even knowing it. So if you’re ready to take control of your financial health and move forward, here are 7 factors that affect your credit score and ability to borrow funds (and how you can turn them around).

#1 - SMALL OUTSTANDING DEBTS

Most individuals pay their utility bills, credit card and mortgage on time, but overlook smaller debts. You may feel that these are unimportant or will just disappear when overlooked. However, that is not always the case. Some debts can still harm your credit score, regardless of how meagre they may appear. So it’s worth your while to pay off outstanding debts as they appear, instead of putting them off and hope they won’t have an impact on your borrowing power in the future.

#2 - UTILITY BILLS

Your gas or electricity bill is not a loan, but failing to pay them in full can harm your credit score. Utility firms don't normally report the payment history of their customers. But they are quick to report delinquent accounts compared to other companies. So if you’re behind on any utility bills, make a note to square them up!

#3 - LONG TERM SHOPPING

In order to enable people to shop around for the best rates on asset, personal and home loans, most lenders penalise individuals who have multiple credit inquiries in a short window. Inquiries made within a few months of each other will most likely be overlooked. However, if you continue to do this over a short space of a few days, you fall outside this bracket. This can have an impact on your credit scores, it could deem you a higher risk to the lender and impact your credit score severely you could potentially fall outside of their credit tiering calculations which could result in a higher interest rate. Interested in finding out more about your financial health? Pre-apply for help online for free here!

#4 - BUSINESS CREDIT CARDS

Having a business credit card is common. But it’s something to be used with caution. According to the bookkeeping experts at Metro Bookkeeping, your business credit card can affect your personal credit score. “If you are the chief holder of a business credit card, most financial institutions will hold you liable for any debts that rack up with it and will report your payment history to the bureaus as well.” Late payments and unpaid business debts are, therefore going to affect your personal credit score. As such, it's vital to use business credit cards with the utmost care, just as you would with your personal ones. Paying your credit cards on time is just as important as it is paying your home loan or personal loan on time - for every payment missed or late it is recorded on your credit file which now will result in a reduced score - affecting your ability to obtain a loan.

#5 - NUMEROUS RECENT CREDIT APPLICATIONS

It's always tempting to sign up for a new credit card that offers an appealing bonus. Many retailers offer in-store discounts, and financial institutions offer tens of thousands of points on airline miles when you apply for their credit card. Applying once will have little to no effect, but multiple ones in a short period will end up harming your credit score. As such, it is wise to limit the number of credit card applications, especially if you are planning to shop for a student, home or car loan. These are all places where a good credit score is essential

#6 - Mistakes You Didn’t Make

Inaccurate information in your credit history can negatively affect your score. For example, individuals with common names often find other individual's information on their report. In some cases, it might be clerical mistakes or typos that lead to a substantial effect on your score. This is another reason it’s advisable to check your credit report at least once per year and dispute any errors you come across.

#7 - Missing Accounts

In some cases, the issue is not what is in your report, but rather what is missing. Some creditors may fail to give certain information to the bureaus, which could result in a lower credit score. An example includes a credit card that features a good record of paying on time failing to be included in your report. For the hypnosis and mental development experts at Mindset Mastery, it’s important to be vigilant to these things. “Noticing something serious like holes in your credit scoring requires you to be present. These skills can be learned even if you have struggled to control your financial habits. Rather than hide from your obligations, make small changes in your money management habits and over time you’ll train your mind to make them habits.” If you discover such missing information omitted from your report, you can either ask your creditor to include the missing information or move your account to another creditor who will do a better job. You should always review your credit report at least once per year to check for mistakes or missing accounts that you would like to see listed. As you can see, there are many things that can affect your credit score. Stay on top of them, and you will certainly improve your score

IMPORTANT TAKEAWAYS

Failing to stay on top of even the smallest bills can lower your credit score.
If you have a business credit card and are also the primary account holder, it can ideally show up on your personal credit report.
Too many applications for credit in a short period can have an impact on your credit score.

Improve Your Credit Score In 7 Easy Steps