Six Of The Biggest Mistakes That Will Have A Detrimental Effect On Your Credit
Credit is something that has a huge impact on our adult lives, if you have good credit you can do many things, however, if your credit is bruised, you will have a harder time doing those same things. What are these mistakes? Can they be avoided?
1. Making Late Payments – Many people believe this is the one determining factor of having good credit. While this is a very big portion of your credit score, it is only 35%, the reason I say only 35% is because you can look at the other side of the picture and say there is 65% left for me to work with.
2. Collections – Having a collection report on your credit report is considered a major derogatory.
3. Public Records – Bankruptcy, Tax Liens, Judgments – these are all major derogatory marks on your credit report.
4. Maxing out your credit cards – Credit card utilization is 30% of your credit score, so this is almost as important as late payments. If you are striving for excellent credit you will want to keep your credit card balances as low as possible. It is best to keep balances below 10% of the available credit limit.
5. Closing old credit cards – Many people think that if they are not using a credit card they should close the card and it will look good on their credit. Well, this is the exact opposite of what you should do. Length of history is 15% of your credit score. If you close out all your old credit cards your history will have only new accounts and this will affect your credit.
6. Settling Accounts – This seems to be a very popular thing to do right now. There are many circumstances that make this option one that is what has to be done. You just need to be aware that when you choose this option, depending on how the creditor reports this to the bureaus, you are doing damage that only time will help.
This is only a few of the things that you need to be aware of when looking at your credit and what can be done either in a positive or a negative way.