Top 10 Credit No-Nos

Credit scores and credit reports can seem complicated. Sometimes, something that seems like it would help your credit actually hurts it. Let’s make it easy. Here are the top ten credit no-nos:

  1. Being late on payments, even by just a day or two. 
  2. Not paying at all – Accounts that the creditor gives up on collecting get “charged-off.” That status means that debt collectors may soon be after you, and it is a huge hit to your credit report.
  3. Letting an account go to collections – Other than bankruptcy and foreclosure, this is the quickest way to drop your credit. First, the original lender reports that you never paid. Then the creditor puts on your credit report that you aren’t paying them, either. That’s two hits for one account.
  4. Opening too many credit accounts at the same time. Your credit score is lowered if you have too many new accounts too close together.
  5. Opening all of those store credit cards to get 30% off — While you see a chance to save money on your purchases, your credit score sees someone who has more credit than they need.
  6. Closing your old credit card accounts – We get it; you don’t need that account anymore. However, part of your credit score is calculated based on how old your active accounts are. If you close an account, it stops being active and doesn’t count for your credit score’s age. If you need to close an account, make sure it isn’t your oldest. Try to never cancel your oldest credit account.
  7. Filing bankruptcy – It wipes out your credit and stays on your credit report for 10 years.
  8. Getting foreclosed on your house – Another big hit that stays on your credit report for 7 years.
  9. Charging too much – Part of your credit score depends on the percentage of your credit you are using. Under 10 percent is best. Anything higher drops your score; the higher the percentage, the farther your credit score will fall.
  10. Repossession – When you don’t make your car payments, the lender may repossess the car. This looks terrible on your credit report. 
  11. Co-signing someone’s loan – If they don’t pay the loan, this can hurt your credit, and the damage may start before you ever know there is a problem because all of the bills go to them. Never co-sign someone’s loan, even a family member.
  12. Having only one kind of credit – It seems strange that you would get a better credit score for having more loans, but the best credit scores have a mixture of loan types. A car loan, a mortgage, and a few credit cards will give you the maximum score.
  13. Ignoring your credit – You are entitled to a free credit report every year. Be sure to get it and go through every line. Mistakes happen, and errors on your credit report can hurt your credit score. If you aren’t watching, you may not know about credit issues until you get declined for a loan.

Want more credit wisdom? Contact the credit experts at Key Credit Repair today!