FORUM Credit Union's website works best with JavaScript enabled

Ways you might be unintentionally hurting your credit score

In today’s environment, your credit score is an extremely important number for many reasons.  Unfortunately many people don’t understand that they may unintentionally be lowering their score.  There are many different activities in your life that can negatively impact your credit score and the only real positive impacts are achieved by paying your obligations on time, all the time.
 
Let’s start with why the credit score is so important?
First, your credit score determines the rate you will be charged on loans.  The higher the score, the lower the rate you will be charged.  Additionally, credit scores are used in many other industries including cell phone, cable and internet providers for account approval.  Remember, the goal is to get a score as close to 850 as possible.
 
We all know that not paying our loans on time impacts our score, but what are other ways we could be hurting our score?
Having too many new accounts at one time can lower your score.  Closing out a credit card you have had for years can lower your score because a longer credit history is better than a new credit.  And signing up for retailers cards all at one time to get incentives will lower your score as well.  Many times consumers do one or all of these activities in a short span and their
 
Are there any non-lending activities that impact the credit score?
Yes, anytime you have an agreement to pay for something and you don’t, it can impact your score.  Examples include traffic tickets, library fines and utility bills.  And if any if these are turned over to collection agencies, your score will be impacted to an even greater extent.
 
If someone has a low score, what is the best approach to improving the score?
Besides paying your loans on timer, there are a couple of ways to build your score.  First is to have a mix of credit which means credit cards, car loans and installment loans.  The second is not maxing out your credit lines.  If you can keep your credit balances around 25 to 35% of your available credit limit your score will be boosted.


Posted: 6/16/2014 with 0 comments

Categories: Credit, Money Matters



Comments
Blog post currently doesn't have any comments.
Subscribe
 Security code
NCUAEqual Housing Opportunity
Federally Insured by NCUA