Your credit score is among the key aspects of your overall finances. You will get better deals when applying for big purchases such as a house, car, or anything else if you have good credit.
This is because a high credit score can help you save thousands of dollars that you would have paid in interest. However, most people don’t know how to improve their credit score, and they sometimes take an action that even lowers their credit score instead of the opposite. Then a professional credit repair company has to help you out in such situations.
With that said, let’s look at some of the most common credit mistakes to avoid.
Mistakes That Mess Up Your Credit Score
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Using Your Card To It’s Maximum
The debt utilization ratio is one of the most important factors influencing your credit score (a measure that tells potential lenders how much debt you owe and how much of your available credit you are using). If you have a 50% or above debt-to-credit ratio, your credit score will decrease.
For instance, if you have a $1,000 credit limit and charge more than $300, you will be above the acceptable 30 percent usage rate, and your credit score will get affected.
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Not Paying Your Bills On Time
No matter the credit you take, being late with your monthly payments will have a significant impact on your credit score.
Your payment history is one of the most critical components of your FICO score, contributing to 35% of the score. This means that even one late payment can have a significant impact on your credit score.
So, the best thing you can do to improve your credit is to make your payments on time.
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Having Too Many Credit Cards
While having a few cards is not necessarily a bad thing. It can benefit you when it comes to credit repair because you won’t max out a single card. However, it might damage your credit score. This is because people with too many credit cards are considered risky by lenders.
Therefore, to better protect your credit score, try not to take too many credit cards.
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Closing Old Accounts You No Longer Use
Although it seems logical to get rid of the accounts you don’t regularly use, closing old or inactive cards can still hurt your credit score. This is because the average length of your credit history affects 15% of your FICO score, and closing a credit card account that you’ve had for years can significantly damage your credit score.
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Not Checking Your Credit Report
If you’re not paying attention to your credit report, you could easily have errors that you don’t even know about.
Credit information errors can impact your chance to qualify for credit cards and loans. So, if you see a mistake on your credit report, you must take get it corrected immediately.
Conclusion
Mistakes like the ones mentioned above can get your credit score from good to bad without you even realizing it.
Instead, take care of your credit, and you’ll surely benefit from lower loan percentages and conditions in the future.
Looking to improve your credit score? Get in touch with companies like Gifted Tax Service and get the finest credit repair services today.
