Kill Your Credit Score or Not make Mistake
As a former credit counselor, I know that most individuals have a misguided perception of credit and I am here to debunk some common credit myths and provide you with some free information about how to improve your score. Since it is an absolute fact that a higher credit score means better interest rates for car loans, mortgages, and other debts, these tips can translate into a few extra dollars in your wallet each month.
1) Approximately 35% of your credit score is based on past debts that are over 30 days late. This means if for some reason you are going to be late on a payment, do not let it slip past 30 days late.
2) Canceling credit cards can actually hurt your credit score, particularly if they are an old and established part of your credit history. Even if you no longer use a card that is ten or twenty years old, in most cases it is better to simply shred it since 15% of your score is based on the length of your history. In addition, keeping accounts open gives you a better debt to credit ratio, which makes up 30% of your credit score.
3) While not taking on any debt and paying for everything with cash seems like a logical choice for individuals who can afford this lifestyle, no credit means bad credit in the eyes of lenders. There is bound to be a time when you cannot buy something with cash, such as purchasing your first house, so make the effort to open at least one account and make purchases with the credit card occasionally.
4) Applying for too many credit cards at once is extremely detrimental to your credit score since every time someone checks your current credit status, it leaves a ding that lasts a year. When you suddenly start applying for a large amount of credit, it sends up a red flag that you are enduring some financial trouble you are prepared for or that you are accumulating too much debt.
5) Although teenagers are not always the most responsible with money, getting your child a credit card early in life can make a significant difference in the long run as it is paid off in time. There are a few excellent options for low-limit cards and prepaid cards, which will both help you child start building a positive foundation for their future credit.
6) And finally, avoid freecreditreport.com like the plague! It isn’t free and is a complete scam. If you want your credit report for free you can check all three major reporting companies every 12 months without any negative effects at the government sponsored site: annualcreditreport.com
7) Never lie or falsify information about your credit score! Your credit score is easily checked by anyone and you may even face legal action for lying about it on loan applications.
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