A BOUNCED CHEQUE
A bounced cheque is one of those reports that will never show up on the traditional credit report. This however, does not make its potential implications on your credit score any insignificant. While your bank may not list your bounced cheque case with the credit bureau, you might still find the record listed due to a bounced cheque that was taken up by a collection agency, civil or criminal charges against you owing to it or writing it to a company which reports to the credit bureau.
The bank may also list you on their ChexSystem which means your ability to open a checking account with another bank is not only limited for some years duration but also your credit limit is reduced.
FREQUENT APPLICATION OF NEW CREDIT CARDS
Anytime you apply for a credit card or a loan, the lender performs an analysis known as the ‘Hard Credit’ inquiry which seeks to review your credit score profile. This exercise will determine your FICO credit score to a tune of 10% and the score sticks to your credit report for a period of two years.
Frequent application of new credit cards also insinuates you are a financial risk to the lender. Statistical analysis has proved that having numerous new credit cards in a short time span is a bad indicator of an individual’s financial responsibility hence it causes a drop on their FICO score.
Delayed payments are characteristic in high risk debtors due to unreliability. With your payment history accounting for 35% of your credit rating, you run the risk of having your bank sell you out to the collection agencies or notify your late payment to the credit bureaus. Both of these have a negative effect on your credit rating especially if the delay exceeds 30 days. This period will however vary from one institution to the other.
A singe late payment may soil your previously good credit rating, though this takes into consideration the severity of the delay, its frequency, and current credit score and how recent it occurred. This might be avoided where you reach out to your lender for a compromise in payment method in cases where some personal issue has arisen making your prior arrangement hard to comply with.
CO-SIGNING FOR FRIENDS AND FAMILY
Before endorsing friends and family for a loan, you may need to consider its effect on your credit rating. Co-signing for a credit with a very high balance could affect your utilization ratio, consequently causing a drop in your credit score.
As a guarantor, you take up the responsibility of ensuring full settlement of the loan by the borrower in accordance to the stated terms. A default or inconsistent loan servicing by the borrower lowers your credit score.