There’s no worse feeling than going to the bank to talk about getting a loan only to find out you don’t qualify.
It’s embarrassing and can make you feel incredibly low. Worse yet, it can be frustrating and confusing for those who don’t fully understand why it happened. Many people who are turned down for loans are taken completely off-guard.
We’re going to clear a few things up, namely, what lowers your credit score.
What Lowers Your Credit Score
As you read through our list, it may come as a shock to you just how many things are taken into account to determine your credit score. While it would be easy to throw your hands in their air and give up, we highly recommend you take a different route.
You see, your credit score is vital for getting approved for car loans, home loans, apartments, and credit cards. It also affects your interest rating on these loans, which over the years can add up to tens of thousands of dollars. Your credit score also affects how much you can get approved for on said applications.
If you want to improve your credit score, take a look at our list of the top nine things that lower it.
A High Debt-to-Income Ratio
Your debt-to-income ratio is a relatively easy concept to grasp. It is the basic formula of money coming in versus money going out. However, this only looks at debts, leaving out things such as groceries, gas, utilities, etc.
To find your debt-to-income ratio, take all of your debts and divide them by your income (after taxes). If your answer is lower than .43 (43%) than you’re doing good. If not, you may have difficulty getting approved for loans or loans with low-interest rates.
To improve this rating, start paying down debts. Generally, start with the smallest debt first. Once that’s paid off, use the money previously designated for that payment and throw it at your next smallest debt.
It’s embarrassing and can make you feel incredibly low. Worse yet, it can be frustrating and confusing for those who don’t fully understand why it happened. Many people who are turned down for loans are taken completely off-guard.
We’re going to clear a few things up, namely, what lowers your credit score.
What Lowers Your Credit Score
As you read through our list, it may come as a shock to you just how many things are taken into account to determine your credit score. While it would be easy to throw your hands in their air and give up, we highly recommend you take a different route.
You see, your credit score is vital for getting approved for car loans, home loans, apartments, and credit cards. It also affects your interest rating on these loans, which over the years can add up to tens of thousands of dollars. Your credit score also affects how much you can get approved for on said applications.
If you want to improve your credit score, take a look at our list of the top nine things that lower it.
A High Debt-to-Income Ratio
Your debt-to-income ratio is a relatively easy concept to grasp. It is the basic formula of money coming in versus money going out. However, this only looks at debts, leaving out things such as groceries, gas, utilities, etc.
To find your debt-to-income ratio, take all of your debts and divide them by your income (after taxes). If your answer is lower than .43 (43%) than you’re doing good. If not, you may have difficulty getting approved for loans or loans with low-interest rates.
To improve this rating, start paying down debts. Generally, start with the smallest debt first. Once that’s paid off, use the money previously designated for that payment and throw it at your next smallest debt.
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