Credit Cards And Bad Credit Rating Factors

Most people know that having a bad credit rating can impact on a range of different financial services and loans, but that is just one piece of the credit rating puzzle.

While it is common knowledge that credit card debts affect credit ratings, there are other factors that can also help bring up or drag down the rating.

The way a credit rating is determined is different for every financial provider, which means one provider may reject a credit card application because they deem your credit rating too low, while another may approve it with the same details.

This rating, however, is always based on the same information about you that is provided in a credit file. A credit file will include a range of personal information including your name, address, driver’s license number and banking details and tends to be split up into the following three sections:

1. Personal or consumer credit information
2. Commercial or business credit information; and
3. Public record information

All three of these sections need to be considered by providers but it is usually the first that will weigh most heavily on a credit rating. Personal credit information covers elements of your finances like loan applications, current lenders and overdue accounts but these may be for services other than your credit card.

An overdue account will show up as a “payment default” if it is over $100 and 60 days or more overdue. This could be for a phone bill, credit card or other loan, and regardless of the nature, it can act as a red flag on credit card applications.

For example, someone who wanted to upgrade a low interest card to a rewards card because they always use the card and pay it off before it is due might still face an unsuccessful application if they have not paid off phone bills. Even if it is a bill from years ago that someone else was responsible for, it can affect your credit rating if your name is on the account.

There are also times when credit files might be out-of-date or have incorrect details on them. This makes it incredibly important to know what lenders are seeing when they look at your file and how you may be able to improve it.

There are a number of credit reporting agencies that can provide a copy of your credit file to you, like the Veda Group’s MyCreditFile website or Dun & Bradstreet. Even if your credit card applications are always approved, it does pay off to look at your credit file and make sure there are no errors because you never know when they might cause other problems.

Credit files may seem like more paperwork and information that you really need, but they can often be the difference between hoping for the best and getting the best with credit cards and loans.