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Factors That Negatively Impact Your Credit Score

by Shelly Eshelman 07/21/2019

A credit score is an essential factor that determines how creditworthy you are and how much interest you should pay on loans. If you have an excellent credit score, you will pay a lower interest rate on loans and credit lines all through your lifetime. Apart from reducing your interest rate, a good credit score helps you save more money that should have gone into interest payment. 

Your credit score is also a basis on which lenders determine if you are creditworthy. Other businesses have now adopted the credit score method as a basis to make decisions about you. Firms like the insurance company and utility company are among the few who have chosen this appraisal style. Having a bad credit score leaves you in a bad position. To determine factors that affect your credit score, read through the points listed below.

Late Payment History

Having a history of late payments would affect your credit score by about 35%. Payment history is the most significant factor that determines your creditworthiness. Payment history like bankruptcy, tax liens, collections, foreclosure, and charge – offs would destroy your credit score – making it almost impossible for you to be creditworthy. 

Level of Debt

Debt utilization ratio makes up about 30% of your credit score. Having a huge debt will negatively affect your credit score and also increase how much you would pay on the interest rate. FICO credit calculator determines your credit score by calculating...

- Your credit balance ratio against your credit limit.

- Total debt you incur.

- How much loan balance you have left as against the original amount loaned

Defaulting

A single default on your loan repayment can leave your credit score in shambles. A person with a high credit score that declares bankruptcy loses up to 250 points, a foreclosed home would lose 200 points off the credit score of its owner. This information remains on your file for as long as seven to ten years. 

Unemployment

Being unemployed for an extended period puts you in the wrong place. It’s something everyone goes through at a point or the other in their lives. Taking money out of your unemployment benefit will leave a slightly negative impact on your credit score. You might be wondering why it so? Credit bureaus do not know you are unemployed; all they see is a reduction in your income without a corresponding increase. It’s advisable you do this for a very short while. 

Having a low credit score is not the end of the world; it’s your ability to work on changing this score that matters. Work with a personal financial consultant to develop a plan to improve your credit score.

About the Author
Author

Shelly Eshelman

My sole purpose is not just to have clients. My life’s purpose and mission is to create more Homes for Special Needs Adults, the disabled and senior citizens.

Having many years in Real Estate as well as lending experience allows me to understand all the aspects of the transaction, to share my knowledge with you. 

I am third generation Real Estate Broker Entrepreneur and helped my grandmother drop flyers door to door as a little girl for her business. She taught me so much, which molded me to become the realtor and person I am today.

Scope of work:

Buyer’s looking to buy and seller’s looking to sell. 

All areas of Southern California. My areas of focus: 

Luxury Home Sales

Residential Homes Sales.

Turn Around Sales 

Mission to be Sold Fast homes. 

I work with all different types of situations. Divorce, Probate, trusts,

REO’s, fix and Flips and more.

Need someone to manage the properties/homes? I offer 

Property Management Services for both residential and commercial.

Additional services and Business areas:

Rental properties and Residential Property Management Services to help renters find homes to move into and landlords to find great tenants. 

Concierge Service For tenants "Free of Charge for tenants"

●Commercial Sales and Property Management

●Consulting, selling, startups for:

●Adults with Mental Disabilities (ARF’s)

● Residential Care Facilities (RCFE’s)

● Skilled Nursing Homes (SNIF’s)

●Urgent Care setups/Exiting,

●Radiography-MRI & CT

Education/Certifications:

● MBA in Business and en-thesis in Project Management, ● BA in Business

● AA in Real Estate

● Certification in Real Estate ● DSP I & DSP II ● CPI Training ● Admin Cert’s for RCFE & ARF

Published Author of the following books: 

1. 27 Mistakes First-Time Home Buyers Make And How To Avoid Them

2. How To Sell Your Homes For More Money

3. How To Sell Homes Fast For Top Dollar