Unusual Things That Can Affect Your Credit Score

Maintaining a credit score is not a cinch. You know that you need a credit score if you want to borrow money. Whether you need it to tide over during financial emergencies or you need it for planned expenditure like buying a car or buying a mortgage, you need to have a credit score.

What is a credit score?

This score tells about your financial behaviour. The higher the score, the better it is. It tells that you have been committed and loyal to your financial obligations. You should have at least a fair credit score to borrow money.

However, nowadays, lenders have become more convenient to lend money. Now they have become liberal in accepting applications from bad credit borrowers as well, even in the case of mortgages or auto loans.

However, it is crucial to note that a credit score must be good to avail yourself of low-interest rates. No lender will lend you money at competitive interest rates if your credit score is bad. These loans can be very expensive and can pose a threat to fall into a debt cycle.

You all know that there are certain ways to improve your credit score. For instance, you should pay off all debts as soon as possible, pay off all your bills on time, avoid putting in multiple applications, and the like. However, despite all these efforts, some people have a poor credit scores.

This is because of some other factors. Though these are not very common factors, they play a paramount role in deciding the status of your credit report.

Unusual things that can affect your credit score

Here are some not-so-common things that can affect your credit score badly even though you have not made a default.

Having no credit at all

This seems to be the best way to prevent from a poor credit score that you should avoid credit. Try to save as much money as possible, so you do not have to borrow money when you come up with a financial emergency.

As far as it is about buying a car or a house, you should try to save money for such expenses separately, but the fact is that you will unlikely be earning this much money that you can meet such big expenses on your own and not building credit leads to poor credit score.

Referring to the fact mentioned above, a credit score proves your commitment to financial obligation. How would a lender know that you would not make default if they lend you money?

Of course, they will get to know by your credit score, and you cannot have your credit score unless you borrow money. If you want to have a good credit score, you should borrow money and pay it on time. Having mixed credits can help you build your credit score, provided you pay all of them on time.

Default by someone else

You can have your credit score dinged because of someone else’s default. Some lenders approve bad credit applications with the condition that a person with a good credit score will serve the guarantee.

You may not mind acting as a guarantor if your friend needs money urgently and cannot borrow money because of a poor credit report.

However, you do not realise the fact that you will have your credit score dinged if your friend makes a default. A lender will ask you to repay the debt on behalf of your friend in case of default because you have promised it by signing the agreement.

This is why you should avoid being the guarantor for anyone because if the borrower fails to pay off the debt, not only will you end up paying off their debt, but you will also end up affecting your credit scores.

For instance, if you have signed as a guarantor for your friend who has applied for emergency loans in Ireland and your friend has made a default, you will not only be responsible for paying off this debt, but you will also have your credit score dinged.

Starting up a new utility service

Starting a new utility service can also be one of the weird causes for a poor credit score. Whether you are looking out for a new cable connection or you are looking for a new gas or electricity connection, the service provider will run a credit check.

This will show up on your credit report as a third party inquiry. Note that each hard inquiry lowers down your credit score. Of course, you cannot wait to improve your credit score if you need to start up new utility service, but you can do it when you know that you do not have to borrow money because it can affect your chances of getting your loan approved.

Not using your credit card at all

It is crucial to note down that a lender will trust your financial commitment if you have sensibly taken on all types of credit. If you have managed to pay off cash loans and have not used your credit card at all, a lender cannot be sure about your repaying capacity in terms of credit card debt.

For instance, if you have decided to apply for a new credit card, a lender would like to see that whether you can manage your credit card debt or not.

Since you have not used your credit card debt, a lender will likely mistrust you, and you will likely get failed to get approval for a new credit card or get the one at lower interest rates.

If your spouse fails to pay off a joint account

You should be careful of marrying someone who has a bad credit score. Of course, your partner’s credit score will not affect yours whether they have a good credit rating or a bad credit rating. The problem will arise when you take out a joint loan.

Usually, married couples take out a joint mortgage. Again, your significant other’s credit score will not affect yours, but the problem arises when your spouse fails to pay down the instalment.

 In future, you will likely have trouble borrowing money, especially if you apply for a joint loan application. Your credit score will be linked to your spouse and it can affect your credit rating.

Making late payments of your mobile phone bills

The payment history accounts for a big part of your credit score. When it comes to being financially committed to your obligations, it does not just include the debt payments but also the payment of your mobile bills.

If you fail to make payments of your mobile bill on time, you will likely end up with a poor credit score. These defaults are not going to be ignored by credit bureaus. Therefore, if you do not have enough money to pay your mobile phone bills, you should take out quick loans with on the same day in Ireland.

The bottom line

There could be several reasons for having a poor credit score. Most of the time, you are well aware of them and know how to fix them, but there could be some unusual reasons for having a bad credit score. 

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