I’m a credit expert – five common mistakes you’re making that’ll destroy your score
CREDIT scores impact almost every aspect of your day-to-day life but these common slip-ups can ruin it beyond repair.
Most people know not to miss payments or max out their credit cards, but there are other very important steps to take to ensure a strong credit score.
Equifax shared a list of some of the most common mistakes, and the impacts they can have on credit.
Late payments leave lasting damage
Contrary to popular belief, late payments can stay on an Equifax credit report for up to seven years. It will stay on your record even if you pay the past-due balance.
Payment history can be a primary factor in determining your credit score. This means it may be more impactful on your credit score than other aspects.
Making only the minimum payment
Making only the minimum payment on your monthly credit card payment is better than missing a payment, but it's still harmful.
The higher the balance on a credit card, the higher the interest is. Keeping your balance high will raise the interest you pay, costing you more over time.
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Over time, it's more worth it to make larger payments when you can to lower the open balance and the interest payment.
Leave your accounts open
Once a credit card is paid off you should leave the account open.
It seems logical to close the account, but this could raise your debt-to-credit ratio and ultimately lower your credit score.
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Closing the account may also change the variety of credit accounts, which lenders generally look for when reviewing applications.
If the account has been open for a long time, closing it could also reduce the average of your accounts which could also lower your score.
Check your credit score monthly
Regardless of the last time you applied for a new card or a mortgage, you should be checking your credit score monthly.
Scores can fluctuate for a number of reasons and it's important to know where you stand. Assuming your score hasn't changed can lead to big surprises and a lot of hard work to bring it back up.
Know what you're applying for
When applying for a new credit card, make sure you understand how and when the introductory interest rates will change.
If you aren't sure you might end up paying more than you can afford after the first few months.
How can I check my credit score?
There are plenty of ways to check your credit score - and you don't have to pay for them.
For example, many credit card companies, banks, and lenders have started providing credit scores for their customers.
It may be on your statement, or you can access it online by logging into your account.
There are also other free credit scoring websites, such as Credit Karma, Creditwise and Credit Scorecard.
What is a good credit score?
FICO, the most widely known credit scoring system, and its rival VantageScore, both use a range of 300-850 points.
The higher your credit score is, the better chance you have of getting the best deals.
Below we list what's considered a good and bad credit score, according to both systems.
FICO
- Poor: 300-579
- Fair: 580-669
- Good: 670-739
- Very good: 740-799
- Exceptional: 800 or above
VantageScore
- Very poor: 300-499
- Poor: 500-600
- Fair: 601-660
- Good: 661-780
- Excellent: 781-850
VantageScore was developed by the three national credit reporting agencies.
While FICO has created different scoring models for each credit bureau.
Read More on The US Sun
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Millions of Americans can get an unexpected boost of 100 credit points this summer thanks to a recent reporting update.
Consumers can combine this with more easy tips to get their credit to a healthy place.