6 Things That Lower Your Credit Score

Running a successful dental business can be both time-consuming and stressful. Therefore, hiring remote bookkeeping services to help you maintain your finances is a great place to start. This will free up some time for you to focus on the clinical side of your business while they worry about the financial side. One of their focuses will be to make sure you maintain a good credit score so you are able to take out any loans to purchase new equipment or even an additional dental practice if you are looking to grow.

The following are six things that lower your credit score:

1. Late Payments

One of the biggest factors affecting your credit score is the timely payment of bills. From your credit card expenses to utility bills, if you miss the deadline, your credit score might fall by 100 points.

2. Defaulting on Loans

Failing to repay loans severely damages your credit score. Defaults remain on your credit report for six years and lower your credibility. As a result, lenders offer a high interest rate.

3. Applying for Multiple Credit Accounts in a Short Period

When you apply for new credit, a hard inquiry is made on your credit report. Too many of these in a short period are viewed negatively by banks and lenders, reducing your chances of getting a loan.

4. Closing Credit Accounts

Closing your old or unused credit accounts impacts your credit history and increases your credit utilization ratio. With no history and a single credit card, lenders perceive that you are not responsible with your spending.

5. Having a High Debt-to-Credit Ratio

Lenders prefer a debt-to-credit ratio of 30%. A ratio higher than this indicates that you are a free spender. Do not open a 0% interest credit account to maintain or increase your credit score, as this will lead to a hard inquiry that will hurt your credit score.

6. Co-Signing Credit Applications

A friend in need is a friend indeed, but don’t feel obligated to help your friend or family member when it comes to co-signing for a credit application. If they don’t pay their debt, you will have to, and this will affect your credit score.

You can get a free copy of your credit report from any credit reporting bureau. Checking it regularly can help you identify the weak areas, which you can rectify and increase your credit score.

If you run a dental practice, get help maintaining your finances with virtual bookkeeping services or an online bookkeeping service. Get in touch with Dental Bookkeeping to track your growth. For more information, call (720) 727-1105.

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