What Causes Poor Credit?
When potential borrowers are researching the various aspects of mortgage and home loan applications, they may want to learn more about the causes of poor credit.
Poor credit can significantly hinder an individual’s ability to gain approval for a home loan and can affect their borrowing power. Home loan providers highly recommend that potential borrowers work on increasing poor credit scores before applying for a home loan product for the best chances of gaining approval.
The Causes of Poor Credit
Poor credit can be the result of a wide variety of financial factors, including credit cards, credit applications, and existing debt. For a more in-depth look at the causes of poor credit, take a look at the following examples:
- Filing for bankruptcy
- Identity theft
- Repeatedly paying bills late
- Missing credit and loan repayments
- Credit and loan applications
- Defaulting on existing loans
- High credit card limits and balances
- Existing debt
How to Improve Poor Credit Scores
Luckily, potential borrowers have the opportunity to begin improving their poor credit scores. To learn more about the various steps that can allow individuals to improve their credit scores, take a look at the following examples:
- Paying off any existing debt, including high credit card balances
- Reducing high credit card limits
- Paying all bills in full and on time
- Ensuring that credit card balances are kept low
- Limiting credit and loan applications
If you would like to learn more about how credit can affect loan applications or are prepared to apply for a home loan, reach out to the Mortgage House team for additional information and specialised assistance.