You need a good credit score to do just about anything these days such as moving to a nice home or apartment, financing a car, buying furniture, buying a cell phone contract, etc. These everyday items can add up rather quickly for a hefty bill if your credit score is not up to par. There are many actions we take each day, week, month and year that can severely affect your credit score, good or bad.
When evaluating your credit score, it is always a good idea to look and see where your score is being negatively affected. This could be some of many things like missed payments, evictions, among many others. There are three companies that evaluate your credit on different levels, they are: Equifax, Experian, and TransUnion. They have a very complex process to retrieve your estimated credit score.
When you take a look at these three credit score reports, you have a great idea inside your head what people are looking at and taking into consideration when coming up with an estimated credit score for you. As you know this information, it will come in handy to know what to look for and be cautious about in future situations. When you evaluate what affects your credit scores, you become more knowledgeable, but do not stop at just that information. Here are some mistakes that you should always avoid when attempting to improve your credit score.
When it comes that time of month when you need to sit down and pay bills and you cannot find a way to pay one on time, it may not seem so terrible, but in the long run the decision to miss the payment or make a late payment will negatively affect your credit scores. Payment history is the number one key factor on a credit score, after all, when your credit is ran it is usually done to see how good of a client you will be for a company. With that said, it is critical to make payments each month and on time, and only miss them or be late when it is absolutely necessary in the situation.
Minimum Balances are NOT the Easy Way Out
Though this can seem like the easy way out when we do not have enough dough to make ends meet. Making only the minimum payment can help in a couple of ways by keeping disconnection away from your name and keeping your balance current. However, paying only the minimum balance on an account can negatively affect your credit scores. Interest and fees add up each month and can often become more than the actual payment itself, which will result in debt. The more debt you are in with a company, the lower your score will appear until it is paid off. Keep all balances as low as possible so they are easier to manage month to month. The more payments you make and the lower your debt sinks, you will find your credit score increasing overall.
Do Not Max Your Card Out!
Credit cards are dangerous, and your credit score is impacted by how much you owe to each of your creditors. Thirty percent of your credit score is weighted on how much debt you currently have, and to how many companies and/or creditors. It is always important to keep your credit card balance as low as possible, which will definitely affect your credit scores for the win.
Minimize the Amount of Accounts You Have
This is a no-brainer. The lesser amounts of credit accounts or debt accounts that you have the lesser amount of money that you will owe. This will result in less debt, and a higher credit score. The more accounts you have the more likely you are to run up your bill and sink deeper into the black hole of debt.
Close the Account
When you have finished paying off a certain account with a specific creditor you must be sure to keep the account with them. If you close the account, you will more than likely be kicked out of their system and it will no longer be reported to the credit agencies, which if your account is paid off in full and was always in good standing- it could be better to leave it open so it will improve your credit scores.
When it comes to credit it can be difficult to figure out what you should do in regards to what to pay, when you should pay it, how you should pay it, and how many accounts you should have. Obviously it is always best to keep in good standing with any creditors that you have, and minimize your amount of debt one account at a time. When you minimize your debt, it does not affect your credit scores as much, thus resulting in a higher credit score.