Unique Factors That Impact Your Good Credit Score
Let's say that you have a good credit score. Let's even go a bit further and say that you have an excellent credit score, the kind that makes people envious of you. You have an outstanding job with very respectable income levels, you pay all your bills on time, and you are very conscious of keeping your credit score as sterling as possible at all times.
You have worked very hard at this all your life, since you understand that a credit score is used these days in far more places than just when applying for a loan or a mortgage. You know that one's credit score is examined by most car insurance companies when they are figuring out what to charge you for premiums, using their alleged statistical evidence that historically people with low credit scores file more insurance claims. You make payments on your credit cards as soon as the bills comes in, long before the actual due date, and for maximizing your credit score, you keep any outstanding balances at the optimal figure of being under 25% of your credit limit.
So with all this understanding, where in the world does it make sense that you would still have a low credit score?
It can and does happen. Although you have already considered the major factors that impact your credit score, you have certainly not covered each and every one of them. There are unique circumstances that can occur which can impact your credit score in a negative way, things that you didn't think would make a hill of beans worth of difference, but which do indeed make a difference, and can render all the work you have done to create a great credit score seem very insignificant. Let's look at some of these.
Say you own some properties and you have some contractors come out and do some work on them. Being the perfectionist that you are, you are unhappy with the quality of the work they have done and refuse to pay them until they fix the quality of the work and complete the job. The contractors file judgments against you, which of course eventually show up as unresolved on your credit report. This type of thing will impact your credit score negatively, even if everything else is perfect.
In another situation, say you got a divorce and as part of the divorce settlement, you give your spouse complete control over one of the joint credit cards you had when you were married. Now your spouse goes to buy a new car but their credit is not quite as high as it needs to be, because you got behind in payments on that credit card. Even though the divorce papers stipulate who is responsible for the debt on a credit card, that obligation does not supersede the identity of the responsible person in the eyes of the credit card institution. In this situation, you should always cancel any and all joint accounts that you may have had with your spouse and re-open them in just your name.
Keeping a credit score in the good to excellent category is something to strive for, but you need to consider all aspects of what impacts the credit score calculations. Even if many areas are the definition of perfection, being lax in other areas is not going to provide the credit score that you deserve to have.
You have worked very hard at this all your life, since you understand that a credit score is used these days in far more places than just when applying for a loan or a mortgage. You know that one's credit score is examined by most car insurance companies when they are figuring out what to charge you for premiums, using their alleged statistical evidence that historically people with low credit scores file more insurance claims. You make payments on your credit cards as soon as the bills comes in, long before the actual due date, and for maximizing your credit score, you keep any outstanding balances at the optimal figure of being under 25% of your credit limit.
So with all this understanding, where in the world does it make sense that you would still have a low credit score?
It can and does happen. Although you have already considered the major factors that impact your credit score, you have certainly not covered each and every one of them. There are unique circumstances that can occur which can impact your credit score in a negative way, things that you didn't think would make a hill of beans worth of difference, but which do indeed make a difference, and can render all the work you have done to create a great credit score seem very insignificant. Let's look at some of these.
Say you own some properties and you have some contractors come out and do some work on them. Being the perfectionist that you are, you are unhappy with the quality of the work they have done and refuse to pay them until they fix the quality of the work and complete the job. The contractors file judgments against you, which of course eventually show up as unresolved on your credit report. This type of thing will impact your credit score negatively, even if everything else is perfect.
In another situation, say you got a divorce and as part of the divorce settlement, you give your spouse complete control over one of the joint credit cards you had when you were married. Now your spouse goes to buy a new car but their credit is not quite as high as it needs to be, because you got behind in payments on that credit card. Even though the divorce papers stipulate who is responsible for the debt on a credit card, that obligation does not supersede the identity of the responsible person in the eyes of the credit card institution. In this situation, you should always cancel any and all joint accounts that you may have had with your spouse and re-open them in just your name.
Keeping a credit score in the good to excellent category is something to strive for, but you need to consider all aspects of what impacts the credit score calculations. Even if many areas are the definition of perfection, being lax in other areas is not going to provide the credit score that you deserve to have.
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