You Might Be Hurting Your Credit Score and DON’T KNOW IT!
No one is exempt from making a credit mistake.
Here are four common ways we can damage our credit (and what can be done about it):
1. Not paying attention to your credit utilization rate.
Your credit scores are impacted by the amount of debt you owe on your credit cards in comparison to the credit limit you have on those cards. This is referred to as your credit utilization rate, which accounts for 30% of your credit score.
The higher your credit utilization, the more likely your credit scores will suffer – simply because it signals too much debt with not much open credit to carry you through an emergency.
To calculate your credit utilization rate, simply divide your credit card debt by your credit card limit and then multiply by 100. For example, if you owe $5,000 on a credit card and have a credit limit of $10,000, you would have a 50% utilization rate. Your debt is based on the amount showing as your balance on your statement, even if you plan to pay it in full.
To ensure you’re not hurting your credit scores, you want to make sure your total credit utilization rate is under 10 % when you total the balances and limits on all of your revolving credit accounts. The lower your credit utilization rate, the better off you’ll be.
2. Forgetting to pay or not paying debts as agreed to creditors
It’s easy to forget to pay a credit card bill on time, especially when life gets very busy. However, missed payments that get reported to credit bureaus can really hurt your credit scores. Your payment history makes up 35% of your credit scores, which is why missed payments can have such a severe impact.
Missed payments mean that you’re not paying a creditor as agreed. It also means it is not only risky to let you use their money, but also expensive because they have to pay the merchants before they receive your money. So that’s why it’s crucial that you track of all your credit lines and ensure that any owed money is paid monthly.
Don’t forget to check the credit card statements on ones you don’t use much. You never know when a charge might appear.
Get in the habit of checking all your bills and setting reminders on your phone or online calendar so you always know when bills are due. And if you ever miss a payment, call your creditor right away to let them know what happened. Many times, credit card companies don’t report missed payments until 30 days after the due date.
3. Closing down old credit cards with great credit history
I know you might be tempted to close your oldest credit cards because you don’t use them anymore, but that credit card could be benefiting your credit scores a lot. It provides data on how long you’ve been using credit – and how often you paid your bills on time. Open credit accounts with no balance can also help your overall utilization ratio because that unused credit can help offset a high utilization on another card.
A closed account will not score as positively as an open account because you are no longer demonstrating management of that credit line. And, your credit history on that card will get deleted after about 10 years. Both of which could have a negative impact on your scores. It’s best to keep that card active, and continue to benefit from the credit history on your old cards.
4. Not auditing your credit reports throughout the year.
You need to keep watch on our credit reports to make sure lenders are reporting accurate information.
Credit bureaus like Experian, TransUnion and Equifax provide the service of collecting, storing and updating credit account data reported by creditors so that your credit references are instantly available when you need them. Most of the time, data reported is accurate, but mistakes and fraud can happen. This is why we need to regularly check our credit files to make sure all accounts are accurate – and no fraudulent accounts have been opened in our names.
Leave a Comment
Small payday loans no credit check offer the individual amount up to £10000 which will help the individual in fulfilling their both short term and long term needs in spite of their faulty credit scores.
ReplyDeleteguaranteed 6 month payday loans
long term installment payday loans
instant loans over 6 months
When it comes to perfect Designing Bath Shower Mixer Tap At Lower Prices for our homes, which are often very suspicious that it is difficult, time consuming and expensive decision, but there are a variety of forms, and aspects that can be considered to give a better chance if the achievement Ideal bathroom next to you wanted.
ReplyDeleteFor More Detail us at: http://www.ukbathroomhub.co.uk/taps-wastes.html