July 31st, 2015 8:09 AM by Jackie A. Graves, President
Having a good
credit score can
help you save a lot of money over your lifetime, but many people find
themselves with scores lower than they’d like because they don’t know how much
everyday things can hurt their scores.
course, once you know what those things are, you’re better equipped to improve
your credit. Here are five common things that can hurt your credit:
the most influential factors in credit scoring is your revolving credit
balances relative to your credit limit. You may be able to afford to spend much
or all of your available credit and pay the bills in full, but that doesn’t
mean you should.
The ratio of your credit card balance to the card’s limit is
utilization — it’s
calculated for each revolving credit account you have, as well as your total
balances relative to your total amount of available credit. (Installment loans
factor into credit utilization, too, but revolving credit has a greater
average, Americans use 24% of their available credit, which isn’t a bad place
to be, but the lower you can get that credit utilization rate, the better. If
you have low credit card limits and want to use your cards for a lot of
purchases, consider paying your bill more frequently so the balance doesn’t
even more important than keeping your debt levels low. In fact, the most
important thing you can do for your credit is make your credit card and
loan payments on time. (Missing other bills, like for utilities, generally
isn’t reported to the credit bureaus, but unpaid accounts could be sent to a
debt collector, and collection accounts hurt your credit.)
missed payment could
knock dozens of points — even 100 points — off your score, so pay close
attention to due dates.
When you apply for a credit card or a loan, the potential
creditor will want to see what your credit looks like. Credit checks for the
purpose of extending credit are considered hard inquiries (a soft inquiry
occurs during something like an account review, employer credit check or when
you check your own credit), and hard inquiries will knock a few points off your
score. If you apply for many credit cards in a short period of time, those
little dings add up to a big dent in your score, but applying for loans is a
bit different, since scoring models group those inquiries together so as not to
penalize you for shopping around. You can read here about how
applying for loans affects your credit scores here.
seem strange to keep open an account you don’t use, but it can make sense from
a credit score perspective. Even if you don’t use a credit card anymore,
keeping it open can help improve your credit utilization rate. As soon as that
account is closed, you lose that available credit, so you would need to reduce
the amount of spending you do on credit cards to keep your utilization from
credit card is one of your older credit accounts, you would want to keep it
open for the sake of keeping up your average age of credit, because that’s something
that takes a long time to build up. Having an average credit age lower than
seven years can suppress your score.
not be able to prevent it, but the longer identity theft goes unchecked, the
higher the chances it will hurt your credit score. A fraudster may open up
accounts in your name or run up a huge balance on a stolen credit card, and if
you don’t stop it before the activity is shared with the credit bureaus, you’ll
also have to deal with getting that information off your credit reports.
Identity theft is extremely common, so the best thing you can do is monitor
your financial accounts closely and act quickly to cut off a fraudster as soon
as you notice anything suspicious.
You can see the factors affecting your credit, plus create an
action plan to improve your scores by checkingyour credit scores for
free on Credit.com, which also shows a summary of your credit history so you can
tell if you’re dealing with any of the typical credit-score killers.
DiGangi – To view the original article click here