My Credit Report Card: What I’m Doing Right and Wrong
Your credit score is something that will open the door to many things in your life. A good credit score can give you the opportunity to own a home, get a good job, drive a new car, or even get credit in the first place. Your credit score is decided by 5 different factors: payment history, amounts owed, new credit, length of credit history and types of credit. There are some things I have been doing that has caused my score to go up. However, there are also things I’ve done that has caused a drop in my credit score. So what’s right and wrong with my credit?
What Am I Doing Right?
- On time payments: I have never been late on a payment to my creditors. Late usually means 30 days or more when it comes to being reported on your credit report. There have been days where my due date fell on a weekend and I didn’t make the necessary adjustments to pay ahead of time. In those cases where I was a few days late, I unfortunately suffered a late fee, but thankfully, the creditors did not report this to the credit bureau. I am current on all of my payments, which makes me look like a reliable person to lend to. Lenders know they will receive their money on time.
- No bad marks: Because I’ve always paid my bills on time, I have no derogatory marks on my credit report. Nothing has gone into collections due to me not paying on time, I have not filed for bankruptcy, and there are no civil judgments or liens on my report. This is further showing lenders that I can be trusted when it comes to lending me money. They won’t have to bombard me with phone calls or take legal action.
- Total and variety of accounts: I have 8 accounts open, and they’re not all the same. Some are credit cards, some are charge cards. One is short term loan, and another is a car lease. This can go as a positive or negative, but it shows that I’m not looking for just one type of credit. Having a good mix of credit reflects on your score.
What Am I Doing Wrong?
- Using too much credit: As far as credit utilization, this is where I’m doing the worst. I am using 95% of my credit available. This means most of my cards are near the maximum amount of my credit limit. I don’t have much room to grow. In a way, I see this as a blessings because I can’t get any further in debt. I have to dig myself out first. As a result, my credit score is negatively impacted. This has been a result of mindless and irresponsible spending mixed with emergencies with no emergency fund.
- Hard credit inquiries: During my quest of independence (moving in with my now husband, getting a new job, etc.) I searched for creditors to deem me worthy of them lending me money. I applied for several credit card offers, which showed as a “hard inquiry” on my credit score. When too many people pull your credit report, your score goes down. My credit was also pulled when we moved into our first apartment, as part of a background check. Unfortunately, during my car search, I was falsely informed on how many times my report would be pulled. This brought my score down lower as well. Therefore, I will not be applying for any new credit any time soon.
- Debt to income ratio: When I was working full time, this wasn’t an issue. I was bringing home a decent amount of money that showed I could afford to pay my bills. When I was laid off, however, obviously the income dropped drastically, causing my debt to income ratio to raise. Yes, we’re living off my husband’s income mostly, but if I want to get out of debt any time soon, I have to work on increasing my income as soon as possible.
I’ve checked my Credit Report Card using CreditKarma, as they give each of these things a letter grade and an explanation on why you earned it, including how your score ranks overall. It’s free, and can give you a better idea of where you stand when it comes to your credit profile.