The 5 Most Common Credit Problems

Low credit scores are caused by negative information on your credit report. There are numerous things on your credit that can influence your credit score, but here are some of the most common problems.

#1 – Paying late

Late payments have the most negative impact on your credit score of all other common credit problems. This is because payment history counts for 35% of your credit score. Anytime your payment is more than 30 days past due, a negative entry is made on your credit report. In the latest version of the FICO score – FICO 08 – single instances of a late payment won’t hurt your credit score as much as if you’re repeatedly late on your payments.

#2 – Too much debt

Carrying too much debt is another common credit problem and it’s why so many Americans are struggling with debt payments, not to mention the impact on credit scores. Level of debt counts for 30% of credit scores and is measured based on credit limits and loan amounts. The higher your credit card balance is relative to your credit limit, the lower your credit score will be. Similarly, the closer loan balances are to the original loan amount, the lower your credit score. Fix the problem of too much debt by paying down your credit card and loan balances.

#3 – Credit report errors

People take for granted that their credit reports are correct but unfortunately, credit report errors can and do happen. Your credit score could be severely damaged depending on the type of error, for example an incorrectly reported charge-off. Federal law gives you the right to dispute inaccurate credit report information and have it removed when the credit bureau can’t verify the data is accurate. Order your credit reports periodically to make sure the information in it is right.

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#4 – Too many inquiries on your credit report

Excessive credit report inquiries happen when you make several applications for credit within a short period of time. Inquiries only count for 10% of your credit score so they won’t cause your score to drop by much, but you can still have future applications denied because of inquiries. Banks review your credit report and could deny a credit card or loan application if you’ve made too many recent applications.

#5 – Closing credit cards

More often than not, closing credit card accounts hurts your credit score. There is generally nothing to be gained from closing a credit card, but precious credit score points could be lost. If you close a credit card that still has a balance, your credit utilization will go up, making your debt level (relative to credit limits) rise. The same could happen even if the closed credit card doesn’t have a balance but other credit cards do. A closed credit card will remain on your credit for about ten more years when it will fall off and no longer be included in your credit report. If this is your oldest credit card account, your credit age (which counts for 15% of your credit score) will drop at that point. It’s best to leave credit cards open.

Checking your credit report

You can figure out what’s on your credit report by ordering a copy. Federal law allows consumers to order a copy of their credit report with each bureau by visiting You can also enroll in a credit monitoring service to get continuous access to your latest reports and scores.

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