Warning Signs of a Bad Credit Score

Many things may cloud our minds in a variety of ways that eventually lead us to negligence when it comes to a credit report, and it will be wise to stay vigilant when it gets to the point when you have to deal with credit.

Typically, a bad credit score is set at ratings under 600 when measured with the standard 300 to 900 scale. There are other ways of finding out that you have a bad credit score beyond just numbers, and they are highlighted below.

 

Denied Loan Application

Getting your loan application denied is one of the fastest ways to discover that you do not have a good credit score, as a good credit score typically grants you an access to a variety of loans such as car loans, mortgages, and many more. While a moderate credit score also means you will get a loan approved, you will most likely pay high-interest rate.

According to the Fair Credit Reporting Act (FCRA), institutions that grant credit are required to provide a detailed report in the event that a customer is denied.

 

A High APR or High Credit Limit

Sometimes some projects demand more financial responsibility; that may lead people to ask for an increase in a credit limit or a lower percentage rate from the lender. If your request is denied, it could indicate a problem with your credit report, which the credit issuer might have spotted by looking at your credit history.
 

Closed Credit Card

Any changes in the terms and conditions of the credit such as a decrease in credit limit or an account closure mean that your credit score has been reduced or you have a zero balance on it.
 

Contact from a Debt Collector

Collection companies who are mainly in charge of utility bills, medical bill, and sometimes subscription for services like gym memberships and club memberships can take action that can affect your credit rating. When these bills end up in collections, you could start receiving this bills via mail or be visited by a debt collector.

Either way, this would affect your credit score negatively. You should always ensure that the collection notices are valid by cross-checking them with your credit report to avoid being a victim of scams.

 

Receiving Subprime Credit Offers

If you have a prime credit and you start to get pre-approved credit card solicitations from some credit offering companies who offer secured credit cards, payday loans, and car loans, this might be a sign of your credit score being reduced.
 

Utilities

Utility companies also check your credit rating before determining if they should do business with you.

In conclusion, there are many ways for you to end up with a bad credit score. Sometimes it could be a result of fraud. Always make sure to check your credit score monthly to see where you stand and what changes you might have to make.