Did you know that last year Minnesota had the highest average credit score in the country at 713 points?

There are a lot of different factors that come into play when determining a credit score. Have you ever asked yourself, “Why is my credit score low?”

Keep reading to learn about 7 possible reasons you have bad credit.

1. The Length of Your Credit History

If you are just starting out on your credit journey, then you are more likely to have a lower credit score than someone who has been paying off their debts for decades. The reason for this is simply because your credit score is also based on the length of your credit history.

In this case, don’t worry. All you have to do is continue to pay off your debts and with time your credit score will improve.

2. Credit Overuse

Having one or more credit cards can almost give you too much purchasing power. Keep in mind that if you use your credit card too much, even if it doesn’t surpass your credit limit, you could be penalized with a lower score.

You’ll want to try and use less than 30 percent of all the credit that is available to you.

3. Late Payments or Missed Payments

Being late on your payments or missing them totally is never a good thing and will destroy your credit score.

Always be sure it make your payments on time or, better yet, make them early.

4. Identify Theft or Identity Mix-Up

How do you get a bad credit score if you make your payments on time and do everything right? In such a scenario, you might be the victim of identity theft. Last year almost 60 million Americans were affected by identity theft, whether directly or indirectly, so it’s still a major problem.

Another possibility is that your credit score is being mixed-up with someone who shares your name. In either case, your credit card company should be contacted as soon as possible to resolve the issue.

5. Not Enough Types of Credit

If you only have credit cards or loans, for example, then your credit score could be negatively affected by that.

The more diversity of credit you have, the better for your score.

6. Applying for New Credit

If you just applied for new credit, then you might experience a slight dip in your score. As long as you continue to make your payments then this should be temporary.

If you continually apply for new credit, your score could get lower and lower.

7. Filing for Bankruptcy 

Declaring bankruptcy is something that should only be done if every single alternative has been exhausted because it utterly ruins your credit score. Make sure it’s the last thing you do if it has to be done at all.

There are other options. Just because you have bad credit doesn’t mean you can’t take out a personal loan or get a new credit card. Bonsai Finance has all the information you need to thrive financially, get the loans you need, and more.

Why Is My Credit Score Low? These 7 Reasons May Be to Blame

If you ever asked yourself, “why is my credit score low?” now you know. If you avoid these 7 pitfalls, you can start working toward a brighter future.

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