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Three Mistakes
That Could Hurt Your Credit Score
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We all know that that a good credit score is the key to low-interest
loans and credit cards with good terms, but oftentimes people make mistakes
on their credit histories without even realizing it. If you are interested
in building your credit, or in keeping your credit history good, you
should read the following suggestions. Who knows? You may just be making
some mistakes that you’re not even aware of.
Mistake # 1
The first and most common mistake is missing payments or making late
payments. This sounds obvious, but day after day, people continue to
pay their bills late, not realizing that it is doing harm to their credit
score. Every time you make a payment to any of your lenders, they report
what amount you have paid, and whether you were on time or late. In
addition, they will report how late you were, and your record of “lateness”
will be represented on your report. What does this mean? If a potential
lender sees that you were late two times last year, and only about a
week each time, they may be able to forgive it, knowing that life simply
gets in the way of on-time payments sometimes. But if it’s clear that
you have a habitual pattern of paying your bills late, they will think
twice about lending you money. What’s more, the later you are, the worse
it will look in a lender’s eyes.
Mistake # 2
At first glance, it may seem like a good idea to close the credit card
accounts that you aren’t using, but in reality, that could hurt your
credit score. There are two reasons why this isn’t such a good idea.
First, if you have a good history with the credit card company, then
you will be wiping off that history from your credit record. (Remember,
everything that isn’t active automatically drops off your report after
seven years.) You worked hard to build that history, don’t take it off!
Next, if you have a credit card that you’re not using, that means that
you have available credit that you’re not using, and that can go a long
way in adding positively to your credit score.
Instead of dropping the account, simply use it every now and then, pay
it off in full when the bill comes and allow it add to your positive
credit score.
Mistake # 3
Finally, shopping for credit can hurt your credit score. The credit
agencies are notified every time there is an “inquiry” about your credit
history, and if you get too many inquires, they will hurt your score.
No one (except the credit reporting agencies) knows the formula for
how many inquires will hurt your report, but the general rule of thumb
is simply not to apply for credit unless it’s absolutely necessary.
By doing so, you run the risk of having to pay higher interest rates,
or being turned down for credit.
Pay attention to these three factors on your credit report, and keep
your credit score in good shape!
About The Author:
Peter Dobler is a veteran in the IT business. His passion for experimenting
with new internet marketing strategies leads him to explore new niche
markets.
Read more about his experience with credit and mortgages; visit
Credit
Score Information Directory
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