There are five ways you may be ruining your credit and not even realize that your actions can be dragging your score down. Are you doing any of these five credit blunders?
The Five Ways You May Be Ruining Your Credit Score
How much of an effect any of these actions may have on your credit depends a lot on where your credit score stands right now. In other words, an excellent credit rating may not be as affected by these actions as a credit score that is already teetering on the category of "bad." Either way, these five things should be avoided if you want to keep your credit rating intact.
One: Applying for Too Much Credit
Resist the urge to apply for credit on a regular basis. Even though it may seem like a good idea to constantly switch to credit cards with lower interest rates or refinance your car loan every time interest rates drop, interest rates cannot be the bottom line if your concern is not ruining your credit.
Having too much credit may drag down your credit score, but just the act of applying for new credit can be detrimental to your credit score because numerous inquiries from potential lenders can ruin your credit as well.
Two: Closing Accounts
Avoid closing accounts if your main focus is making sure your credit score is high. Closing several accounts can drop your score substantially.
The amount of available credit you have is one of the many factors that determine whether you have good credit or bad credit. Closing accounts drops the amount of available credit you have and can also drop your credit score.
If you have decided to stop using a credit card consider resisting the urge to close the account. Instead, you may decide to just take it out of your wallet and put it away. Keeping the account open will count towards your available credit and may help your credit score.
Three: Maxing Out Accounts
Just because your creditor grants you a certain amount of available credit, it does not mean that you should use that maximum amount. The closer your credit accounts edge toward the limit, the worse it looks on your credit report.
Even if you make your payments on time every single month, keeping your balances close to the maximum credit limit is not a good idea.
Four: Paying Just a Little Late
Some consumers feel as though paying a few days past the due date is fine as long as they do make the payments before the debt is thirty days delinquent and the delinquent status can show up their credit report. A late payment is late whether it is two days late or two months late, and too many late payments can result in the creditor closing the account.
Late payments drag down a credit score, and accounts closed by creditors while a balance remains can also help ruin a consumer's credit.
Five: Not Protecting Your Info
A surefire way to ruin your credit is by not taking precautions to protect your personal information. When your identity is stolen, the thief can open accounts in your name and go on a spending spree that can take years to recover from. Even if you have no legal liability to repay the debts incurred from the identity theft, you will still have to prove to creditors that the debts are not yours.
Not protecting your personal information such as your Social Security number, account numbers and birth date, can ruin your credit incredibly fast.
If you recognize any of these five ways you may be ruining your credit as something you are currently doing, now is the time to take the steps to fix the problem. The sooner you can get back on track with how you manage your credit, the sooner you can build your credit back up to where it once was.