If you plan on getting an auto loan any time soon, one of the things you have to keep an eye on is your own credit score. Your credit score will determine the interest rates you pay on that auto loan and even if you get a loan or not. Here are five things that will make your credit score drop and cost you money in the long run if you are not careful with your financial habits.
Making Late Payments
Late payments are deadly to a credit score. If you have a good score, it could drop by more than 100 points by simply making one late payment. For people with average credit scores, the score could drop by as much as 80 points. Actually, late payments are the biggest killer for credit scores, yet your score does not increase as quickly by making your payments on time after it has already dropped.
Closing Accounts
When you close your credit accounts, you drop your ratio of debt to available credit. This has a bad effect on your credit score. The actual drop in score varies between cardholders because it depends on how many cards and accounts an individual has and the amount of debt and available credit.
Those are two main killers to a person’s credit score. Be sure to come back to see the other three before you apply for that auto loan!