When applying for loans, credit cards, or even trying to lease a new apartment, your credit score is the major determinant of how well you will be fair. Ironically, very few people know what their credit score is. They are not aware of the fact that they may be doing various things to hurt their credit score. If a high credit score is important to you, and it should be, beware of the following things to keep your credit score in check.
Best Way to Increase Credit Score
Do you have one of those months where everything seems to pile up and you just can’t make ends meet? You take a look at what you owe and who you owe it to. And finally, decide that the credit card payment is going to have to wait until the next check. Not even that, let’s say you just forget to make your credit card payment on time. This is the first and most common mistake: missing payments or making late payments. If you know it or not every time you make a payment to any of your lenders, then you should be aware now. They report what amount you were able to pay and whether you were on time or late.
If you’re late, consider it much like getting a test question wrong, your credit score drops. You must know the best way to increase your credit score. In addition, they will report how late you were, and your record of “lateness” will represent in your report. Let’s say, you want to get a loan for a new car and the dealer pulls your credit report. However, your credit score shows you were late X amount of times last year. Put yourself in his shoes. If you lend your buddy $20 and he pays you back immediately, you will lend him money again. However, if you have been waiting for that $20 for over a year, next time he asks, you’re not going to be as keen on it are you? If it’s clear that you have a habitual pattern of paying your bills late, they will think twice about lending you money.
More Ways to Take Care of Your Credit Score
Second, this is another one people never consider will hurt their credit report and I know when you read this you will realize you are guilty of it. If you get a mailing promoting a 0% credit card or a new great rewards credit card and figure you could use another card do you apply for it? Well if you do, you could be docking your credit score yet again. Every time you submit an application for a credit card or apply for a loan, there’s always a process. The credit agencies will receive a notification of your credit report being pulled and checked. If this happens too many times, it will undoubtedly hurt your credit score.
The credit agencies will look at those inquiries as attempts to get credit or a loan and if those don’t follow the inquiry, it reflects poorly. Only because it seems as though you’re not getting approval. No one (except the credit reporting agencies) knows the formula for how many inquiries will hurt your report. However, the general rule of thumb is simply not to apply for credit unless it’s absolutely necessary.
Lastly is another tip to look out for that I am sure most people don’t really think about and that’s leaving credit cards on your credit report. I know it’s the opposite of what you have been taught but let’s think about it. If you have a credit card on your credit report that has been paid on time every time it’s a star on your credit report. Removing it would dock your score, believe it or not. Of course, credit scores favor accounts that are active. So try and keep charging small items and paying them off regularly to maintain this benefit on your credit score. For sure, you’ll be surprised how quickly your credit score will increase.