Monday, 26 March 2012 21:11
score says a lot about you to lenders. One small mistake can cost you points
which in turn can cost you money in higher interest rates or even cause you to
be denied for a loan. Here are 5 mistakes that can hurt your credit.
Missing a single payment
It may not seem like a big deal to miss one payment
especially if it is a small amount, but missing just one payment can cause you
to fall around 100 points. Once you pay the amount you owe, your credit score
should rebound fairly quickly, but you don’t want it to effect a loan decision
in the meantime.
Opening too many lines at once
It looks bad to lenders if you received a large
amount of available credit in a short amount of time. Plus, keep in mind that
store credit cards and those furniture/appliance no payment options are all
considered lines of credit that generate hard inquiries and can cost you around
5 points each.
Ignoring collection notices
Unfortunately, even if you think you don’t think
you owe a bill, like a medical bill, it will still be turned into collections
if it isn’t paid and negatively impact your credit score like any other missed
payment for around 100 points. Probably not the most appealing solution, but
the one that will have the least amount of impact on your credit, is to pay the
amount and then settle with the company.
Closing an account
The effect this has on your credit varies based on
the amount of available credit on the account, but closing an old account can
lower your credit-to-debt utilization ratio. You may want to keep the account
active by making small purchases and paying them off right away.
Maxing out a credit card
Again, this affects your credit-to-debt ratio and can have
a negative impact on your credit score. Experts suggest keeping your balance on
all credit cards below 33% of the available limit.