It makes little difference if you plan on buying a car or home soon, or if you won’t be making any major purchases in the near future, it’s always good to look for an opportunity to rebuild credit. What’s more is it’s good to educate yourself on daily habits that may be chipping away at your score, something you may not realize until you are ready for a major purpose. Ready to learn more about those sneaky little habits?
A Single Late Payment
Maybe you always pay your credit card bill either early or on time, but you’re human, which means you’re prone to mistakes. Know that even a single late payment made 30 days after your due date can eviscerate your credit score. You could get caught up in your life and not realize until your next payment that you missed your last payment, but by then, your credit card company may have already notified credit-reporting agencies.
Several Credit Inquiries
It’s a great idea to shop around for the best loan for a car or your new home, but know that diving too deep into the application process can put your credit score six feet under. Too many credit inquiries can be especially devastating if they’re spread over a period of time that’s longer than 14 days. Your best bet is to do some research beforehand about loans and interest rates and gather all your quotes at the same time, preferably within the same week.
Late Payments on Other BIlls
Besides your credit card bill, you want to make sure that you pay all your other bills, such as your utility, internet and car note bills, on time. Your other financial obligations impact your overall credit score as well, so be sure to keep that in mind the next time you think about putting off your internet bill payment by a few days.
Applying for Additional Credit Cards
In addition to applying for loans, applying for more credit qualifies for a hard inquiry. If you’re approved for that rewards card you’ve got your eye on, then you may not mind your credit score being dinged by a few points. On the other hand, if you’re denied for credit, not only do you not get a new credit card, you’re also left with a chipped score.
Incorrect or Outdated Info on Your Credit Report
Get into the habit of ordering a free credit report as many times as you can throughout the year, spreading requests out over time. Each time you receive your report, look over it with a critical eye to see if there’s any outdated or flat-out inaccurate information that needs to be corrected. Even the smallest of inconsistencies can cost you in credit score points. One thing to bear in mind is that it can take some time and effort to take care of inaccuracies, but know that it will surely be worth it over time.
Using Too Much of Your Credit Limit
Even the most responsible of credit card users who use their cards and make payments in full and on time can still have lackluster credit scores. This is because using too much of your available credit can hurt your score. Do yourself a favor and pretend that you have less of a credit maximum than you actually do. For instance, tell yourself that your $2,000 line of credit is actually a $500 line of credit and you cannot spend more than that a month. While you might feel $1,000 is a bit more generous, your credit utilization rate makes up 30% of your score, so be sure you keep that in mind before using your credit card for everyday expenses throughout the month.
Closing Zero-Balance Accounts
Say you’ve paid off a credit card and don’t plan on using it again. You may feel that it makes sense for you to remove that account from your credit report, but the reality is that it’s better to keep it since it’s doing more good than harm. Specifically, your old zero balance cards lengthen your credit history and your credit utilization rate.
By familiarizing yourself with how credit scores work, you can develop solid spending and credit utilization habits. See for yourself just how much good these tips can do for you in your quest for a solid credit score.