6 Common Mistakes That Cause Bad Credit

When the time comes that you need to buy a new car, bad credit can hold you back. At least, it can if you try to secure financing through many banks and auto dealerships; these businesses will view a poor credit rating as a warning sign and judge you to be an unacceptable borrower. Being viewed by most lenders as a high-risk customer is enough to make getting the auto loan, and therefore the vehicle itself that you need, a very frustrating challenge.

At G&E Motors, though, we’re proud to be different from other lenders; we offer guaranteed instant approval to every customer, even to those that have bad credit scores. Ideally, you want to avoid getting a poor score in the first place, but how? Here are the six most common reasons people wind up with bad credit:

1. Not Paying Your Bills On Time
A major contributor to a poor credit score is paying bills past the due dates. Just a couple of late or missed payments over several years, especially for multiple debts, might not make a huge impact on your rating, but doing it on a regular basis surely will. When your credit score is generated, the actual number is an indicator of your ability to manage your credit responsibilities. This give lenders an indication of how reliable you’re likely to be with future loans. And if you have recently missed payments, this will affect your score even more. Missing payments by only a week or so is less harmful than missing them by longer periods, so if you can’t afford to get every payment in by their due dates, make every effort to take care of them as soon after as possible.

2. Failing to Tell Creditors When You Move
Notifying your lenders when you move may seem obvious, but relocating can be hectic, even if you’re only moving a short distance. Still, hard as it may be to believe, some people can let this small but important detail fall through the cracks. If you do move, especially on if you do so often, failing to inform creditors of your new address means your bills will be delayed reaching you and you won’t be able to make your payments on time. This, of course, takes you back to the problems discussed in the previous paragraph. So, be sure to notify your lenders of your moving date and new address as soon as you have both.

3. Making Too Many Credit Applications
Think applying for credit is harmless? In theory, it should be, but it can have a negative impact on your score. Whenever you make an application for credit, you allow the that lender to access your credit reports. They will automatically post an inquiry notice during the process, which lets others know who has viewed your report and when. By law, this stays on your report for 24 months, but credit scores only take inquiries within the past 12 months into account. These are used to assess how much credit-shopping you have done recently, and those with a higher number are viewed as being a larger risk than those with fewer credit applications.

4. Closing Old Credit Card Accounts
When you finish paying off a credit or charge card, it can be tempting to just close the account and have less credit in your life. It’s understandable; not only are you celebrating getting rid of the debt, you also end any temptation you may have to add new charges to it.
However, cutting the card up and shutting the account can have a negative effect on your score. You’ll have less credit available to you, and your history with the specific card will vanish, lessening your overall credit history. You want to show that you can manage your finances responsibly and handle your payments timely, and a long, active history reflects that. When you pay the card off, it’s best to not only keep the account open, but to use it occasionally for small purchases.

5. Letting Your Debt Levels Get Too High
When you max out a credit card, or cards, you run the risk of making yourself look irresponsible without realizing how your credit rating may be affected. Putting excessive charges on your cards is easily done, especially if you’re having some financial issues and need to pay for goods or services with credit. However, the more you do this without keeping up to date with the payments, the more your debts will mount up. If creditors see that you have let your credit card debts get to the maximum, they will no doubt question how likely you are to make future payments on time. Make sure you keep paying your cards off when you can.

6. Putting Big Charges on Credit Cards for Rewards
Credit card companies tend to offer rewards for customers, which they hope will make adding charges to your accounts a more satisfying experience. Incentives may vary on scale and value, from points to redeem at stores, to vacations and more. This is incredibly tempting for customers, certainly, but it does make getting into debt easier than it should be. You should only let these rewards tempt you into racking up charges if you know you can completely pay it off quickly; but even then, it’s a risk. Think about how much you really want or need that incentive, and whether it’s worth potentially getting yourself into more debt. The more you add charges on your credit cards chasing rewards, just bear in mind that if you can’t manage to pay the debts off, you could be seriously affecting your credit score for years to come.

At G&E Motors, we understand just how hard it can be to get an auto loan if you have bad credit, which is precisely why we’re dedicated to helping you get the financing for the car you need. We have an inventory of cars and trucks to meet every need, and offer guaranteed instant credit approval for everyone, regardless of your credit history. Our financing team is happy to discuss financing options that are within your budget. Give us a call to set up an appointment, or just stop by; our staff is always available.

G&E Motors · 451 Lincoln Highway, Langhorne PA · 267-560-5519