Who are out to get you? The Credit Bureaus. Who else?
How? You might ask? Well read on -- you probably don't know a half of it.
For starters: each and every time you apply for credit anywhere -- bank, credit union, wherever, your inquiry is recorded in your credit file with one or more of the Credit Bureaus. (The FBI and Homeland Security have nothing on these guys where getting information is concerned). So tread carefully through this minefield when you're scoping the competition for a loan.
If you make too many such applications, particularly recent ones, then you are going to slash your FICO score to tatters,
If you make lots of inquiries in a short space of time lenders are going to reach a justifiable conclusion. Maybe, just maybe you are needing too much credit and will not be the kind of person with whom they want to associate. And, in addition to lowering your FICO score you are not going to get the loan you desperately want.
To make matters worse the Bureaus have to keep on record a list of all inquiries on your Report for two years minimum. Which means you can't get rid of them during that time.
If you don't think you made an inquiry that they have noted you can, of course, lodge a complaint to have it removed but it should be noted that such inquiries are notoriously hard to have removed.
The golden rule here is simple -- be as sure as you can be that you will qualify for credit BEFORE you apply.
Pay your credit card bills on time. Not only will you save on not getting dunned with late fees but, more importantly, no mark will be made on your credit report so your score will remain intact.
In fact pay BEFORE the grace period on your credit cards. On the payment due date, your credit card company sends the balance to your credit bureaus. That means if you pay after the due date, the balance doesn’t show as lower for a whole month longer. Pay before your due date and you will have a better score.
AND --
Don’t Close Accounts
A happy, happy day may come when you have paid off your card balance. But don’t close the account. The longer an account is open, paid up or not, the better. This “seasoning”, as it is termed, of accounts helps in the calculation for your credit score.
Have a variety of credit types
All open at the same time improves your credit score. Instalment loans for perhaps a car or furniture, revolving credit, department store cards, etc. This demonstrates that you are able to pay longer and short term debt and a “variable” monthly payment on your credit cards at the same time. Which is, of course, all to the good.
Pay Collections For Better Results
If you start getting behind on your phone bills, credit cards, car payments, etc you are sending a clear message that you might not be quite the ideal client the Credit Bureaus want. Any unpaid collection or 30+ day late on your revolving accounts comprise around 35% of your low credit score.
In fact paying collections and revolving accounts on time is one of the fastest ways to improve your credit score. So, accept the fact -- if you have one of these accounts then you should nurture it as you do your mortgage payments. They may be “out to get you” but at least you can make sure they won’t get you this way.
