Top 10 Credit Mistakes to Avoid (What You Want To Know Wednesdays )

Maintaining excellent credit is one of the most important things that we can do as an adult. Here are some mistakes to avoid:

  1. Don’t miss a payment. Late payments can reflect negatively on your credit score.
  2. Don’t max out your credit cards. Creditors consider 30% or less a healthy utilization rate.
  3. Don’t take out cash advances. It can be expensive. Too many of these transactions can hurt your credit utilization rate as well.
  4. Don’t chase rates. When you have debt you may want to open a new account with a 0% interest rate and transfer balances. When you try to open a new account there will be a hard inquiry on your credit, and too many of those can lower your credit score.
  5. Don’t stop using your credit cards. Some credit card companies may mark your card as inactive, which can shorten the age of your credit accounts.
  6. Don’t apply for several credit cards at once. Again, several inquiries on your credit will affect your credit score.
  7. Don’t spread out mortgage or auto loan applications to protect yourself. While applying for several credit cards at once, the opposite is true when you’re applying for auto loans or mortgage loans. Creditors understand that you will need to shop around for the best loan. As long as your loan applications occur during a short period of time, they’ll be counted as just one hard credit inquiry. There are no specific time lines, but staying within a 30 day period should be okay.
  8. Don’t co-sign someone else’s loan. When you co-sign a loan you are putting your good credit score at risk. If they don’t make payments on time, it will affect your credit as well.
  9. Don’t forget to monitor your credit to catch errors or fraud. Always keep an eye on your credit to make sure your identity has not been compromised, and that companies are reporting your credit correctly.
  10. Don’t pay for credit repair service. Credit repair companies cannot remove accurate negative information, even though they will promise to do so. If there is inaccurate negative information on your credit report you can dispute it yourself without having to pay anybody else.

 

*from our friends at learnvest.com


* Specific loan program availability and requirements may vary. Please get in touch with your mortgage advisor for more information.