Companies that issue any type of credit pull an applicant’s credit history when they apply. Your credit history includes a full list of any debts you have, along with judgments against you. It determines your credit score, which helps the company decide whether to extend a line of credit. A bad credit score can stop you from getting the home of your dreams or buying a new car. It can also stop someone from hiring you and make it hard for you to get a credit card. You should look at the three most common signs you have a bad credit score.
As you shift to a new house, you need to call the utility companies and ask them to turn on your service. Most of those companies will pull your credit to determine if you are likely to pay off the money you owe. Take, for example, your electric bill. The electric company estimates how much power you will use and sends you a bill for that amount. It will do an audit a few times a year to look for mistakes. If any utility provider asks for a deposit, it’s a sign you have bad credit.
To get back the money owed to them, companies often work with debt collectors. There are rules about what the collectors can do to get the money you owe and laws that limit when they can call. They can make your life quite hard, though. You might get calls every few hours at home or work and see your loved ones getting calls. Debt collectors also have the right to file a court case against you, which may result in a lien against your bank account or home. Both letters from the court and calls from debt collectors are signs you have bad credit.
Can applying for a credit card hurt your credit score? Yes, it can. According to the experts at SoFi Invest, your applications can lead to dings on your credit score. This is due to the creditor pulling your credit to see if you are a good applicant. One sign that you have bad credit that may prevent you from getting a new card is when you pay only the minimum balance due each month. Your credit card company sends you a bill every month that shows the total amount you owe and the minimum amount you must pay. Paying only the minimum amount due shows that you cannot afford your bills. It also shows that you have a high ratio of debt to your total credit. Another sign of bad credit is when you keep spending up to the available amount of credit on one or more of your cards.
A bad credit score increases the risk that you won’t get a line of credit when you need it. Some of the signs that you have a low credit score include calls from debt collectors and required deposits.