You May Be Damaging Your Credit Score and Don’t Know It

You would be surprised at how little people know or understand the basics about Credit and Credit scores. A lot of misconceptions and theories can lead to people messing their credit scores and having to start over. You may be damaging your credit score and are clueless; going to the mall and using that credit card recklessly, not knowing the dire repercussions it will bring you later on in your life.

Countless myths circulate and generate through out the grapevine, it is hard to catch up. The most ridiculous one is that when you are married, you automatically start to share a credit score and you are no longer at risk of damaging your credit score as individuals. Really? How did people figure that one out?

But you know what they say; “When you don’t know, you don’t know” so let us look at some regular mistakes folks make that can lead up to damaging your credit score.

Damaging Your Credit Score

1) Too many Credit Checks

Did you know that the more you have your credit score checked out, the more it is lowered? When you keep calling Lenders, shopping for the best quotes and prices for auto or even mortgage loans, the first thing they do is check your credit report with all three Credit bureaus namely Experian, Transunion and Equifax. What it implies is that you are just about to take on a lot of debt and that raises red flags instantly to Lenders.

2) Having no credit at all

While you are busy feeling content that you don’t have any loans at all, the minute that you need them, no one is going to be willing to give you one because you don’t have any credit history. They want to view a history where you have been able to handle debt and how well you managed to pay off your loans.

They want to determine whether you are capable of paying off your loans in a timely manner and if you finish payments on them. If you don’t have that kind of Credit history, the reluctance to issue with a loan will be high. It may end up damaging your credit score more than sustaining it.

3) Paying the minimum on a credit card

When you make the minimum payment on your credit card, you end up damaging your credit score more than you can imagine. It only leads to higher interest rates and more fees. All it looks like to the lender is that you are not conscious of your debt and that you will end up having a huge debt that you can’t eventually pay off.

So make sure you pay off every penny in your end of month balance, so that you maintain being debt free.

4) Closing down your Credit card accounts

There is always the temptation to close an account that you managed to pay off the debt, but it is a wise idea that you leave it open for the sake of establishing a longer credit history.

Lenders like to see that you have the ability of holding on to a well taken care of account and that you have no problem in dealing with credit cards. They want someone who is dedicated to finishing off their debt and more impressed with someone who is able to maintain that debt over long periods of time. Therefore, closing your account would only be damaging your credit score.

5) Signing up for discount cards

It is very tempting to open up a discount card where you get a percentage off from your merchandise, but this may have implications on your credit score. It is a bad sign to lenders because it will look like to them that you may be attempting to incur more debt, so they will not be eager to deal with you. Also, inquiring also makes your score go down, so it just ends up damaging your credit score.

6) When your credit limit is lowered

You may think that you are doing yourself a favor by lowering your credit limit, but all it ends up doing is damaging your credit score. What happens is when you lower it; you appear to the lender as if you are not good with credit. You seem to be more credit worthy by using a smaller sum of your whole available credit.

Conclusion

Those are some of the things you should avoid doing so that your credit score remains intact. Notice that the more you try to do, the worse it looks to your lender. Remember, the lender’s only agenda is to see that you are capable of getting something on credit and also reliable in making payments towards the debt.  Also, don’t give the lenders a reason to keep checking on your credit report.