Have you ever thought about why your credit history isn’t as impressive as you would have wanted it to be? See if any one of these ten things or bad credit habits could be the reason for your low credit score:
1. Old accounts that have been closed. Be careful about closing old accounts, especially those that have been with you for a long time. Your credit report is made up of these old accounts and closing them about would be like erasing the oldest parts of your credit history.
2. Refinancing loans too often. Some financial experts may recommend home loan refinancing to improve your credit history or to get lower rates. But frequent refinancing may send out a negative impression to creditors and can badly hurt your credit score.
3. Too many store cards. Gas station credit cards and gas station cards are popular but owning too many of these cards can also send a negative impression to lenders and cause your credit rating to drop. Also, too many credit cards increase the risk of bad debt.
4. Maximizing your credit limit. No matter how long the APR your credit card offers, never use up more than 30% to 40% of your credit limit. Maximizing your credit limit on any of your accounts can pull down your personal credit score.
5. Multiple credit applications. Avoid sending multiple applications to different lenders or credit card companies as too many inquiries in your credit report can hurt your credit score. Even worse, if your application gets declined, it would cause a stigma on your credit history.
6. Fines and penalties. Fines or penalties from public libraries or parking lots can also affect your credit rating. How? Some parks or libraries turn such fees to debt collection agencies who could mess up your credit rating.
7. Not using your full name in your accounts. It’s best to use your full legal name on all your accounts to avoid the risk of mistaken identity. Your credit history could suffer if the credit information in your report happens to be someone else’s, and not yours.
8. Late payments. Late payments can badly mess up your credit report as payment history comprises 35% of your total credit score. To maintain a high credit rating, make it a habit to submit your payments on time to all your creditors.
9. Unauthorized charges. Check your credit report at least twice a year to make sure that unauthorized charges or fraudulent transactions are not pulling down your credit score.
10. Old negative remarks. Does your credit report contain negative remarks such as charge offs or bankruptcy? If so, your credit score could badly suffer. If those “charge-offs” have been already paid, request that these remarks be erased from your report right away. If your bankruptcy has been in your report for more than 7 years, you should inform the credit bureaus so your credit report can be immediately corrected and updated.
