As a consumer, maintaining an excellent credit history would work to your advantage. However, keeping credit in good standing may not always be that easy. In fact, many people suffer from bad credit and not everyone understands the factors that can lead to bad credit. Let's take a look at the following points:

Occasional Late Payments. !5% of your FICO score is based upon your payment history. This means, timeliness of payment makes up a significant percentage of your credit. Are you often late in paying your bills? Even occasional delays with your payment can badly damage your credit score. This is why it's very important to be aware of your due dates.

But what if you can't make it on your deadline of payment? The best thing to do is call your creditor and give them an advanced notice. Explain to your creditor why you won't be able to submit on time and request them not to report it as late payment. Creditors would usually give up to 30 days extension for customers who make an advanced request.

Avoid high credit-to-debt ratio. Experts recommend not using up more than 30% to 40% of your credit limit. Even if you have a low interest rate credit card, make sure that you won't be maximizing your credit. Doing so can pull down your credit score. To avoid exceeding your limit, pay close attention to your charges and pay off your balances in full each month.

Avoid Charge Offs. What are charge offs? These are bills that are long overdue that creditors no longer expect you to make your repayments. Although collection attempts may have been stopped, a record of charge offs is a derogatory remark and can badly damage your credit history. To avoid charge offs, never hide or ignore creditors who are trying to contact you about your debts. Instead, speak with your creditors and negotiate your repayment. Multiple credit report inquiries. Whenever you apply for a new account, your chosen lender would be inquiring about your credit.

Nevertheless, too many inquiries on your report can cause a negative impression to lenders. Creditors may become suspicious about why you're sending too many applications to different companies at one time. Furthermore, a declined application can send an alarm to potential lenders. If you've been rejected by a lender, you would be instantly considered as a high risk client.

False charges and erroneous information. Are there incorrect or unauthorized charges in your credit report? If yes, that could be a reason why you have bad credit or a low credit score. You can dispute false information in your credit report by sending a dispute letter to the creditor involved or to the bureau that issued your report.

This is why it is recommended to obtain a copy of your credit report at least twice a year so you can check for errors or unauthorized charges in your account. Correcting such errors can make a big different in the status of your credit.