What Causes a Poor Credit Rating at credit cards reports

If you are just starting out and thinking about applying for a credit card or loan or already have a credit history, it is important to understand what causes a poor credit rating. Here are some tips.

Obviously one of the reasons that cause bad credit is when you do not pay off your debt or loan or are late in paying off your debts. While financial difficulties do occur to most people, it is important to contact your creditors to make them aware of the situation and hopefully you and your creditors can come to an agreement and a payment plan to get you back to paying off your debt.

Another factor that causes poor credit is debt to income ratio. If you make $50K a year and you have $40K in credit card debt, you will be viewed as a high risk by creditors. Make sure that you have plenty of income to handle your debt, many people use credit to help them live beyond their means, this usually only ends up becoming a disaster in the end. Make sure you are responsible with your debt.

Another factor that can give you a poor credit rating is if you have too many credit cards or loans. Even if you are able to pay your monthly bills, if your income is $50K a year and you have credit lines of 100K or more, new creditors will see it as a disadvantage to approve you. They are afraid that if you fall into financial difficulty, you will charge all your credit lines up and then will not be able to pay it off. If you are looking to improve your credit rating or new to credit, look at the above tips on what can cause a poor credit rating.Consumer Reports – Credit Cards : http://www.reports24.com