11 Ways to Hurt Your Credit
-- Posted: January 03,2008 | Jonathan Denissen
Numbered lists tell us everything from how to lose weight to what not to do when planning a party. Many are fun and frivolous, but few lists are as important as one that tells you what not to do when it comes to your credit score. If you are applying for a loan, obtaining insurance or hoping for a new job or promotion, a good credit history makes a difference.
Guaranteed Credit Killers
If you would like to see your credit score tumble precipitously, then adhere to the following list of ways to make sure it happens:
- Minimize your credit history
Lenders like to see a potential borrower responsibly manage a mix of revolving debt (such as credit cards) and installment debt (such as a car loan or most mortgages). - Ignore credit report errors
If you’re not aware of what's in your credit report a few months before applying for a loan, you'll have no idea how a lender will perceive you, rightly or wrongly. - Make late payments
Even one late payment can lower your credit score and increase the interest that you may be charged on loans. Also, people are penalized more for missing high payments than low ones. - Have lots of low limit credit accounts
Credit accounts with low limits suggest no experience with higher level limits. - Max out credit cards
This suggests that you cannot manage your spending and that you are overextended. - Make only minimum payments
This can cost you thousands of dollars over the life of the debt or loan. - Have no credit history
This is nearly bad as a poor credit history. Or, you can opt for a secured credit card if you are having trouble obtaining credit because you lack history. To find one, visit http://www.cardtrak.com, http://www.bankrate.com, http://www.cardweb.com or http://www.getsmart.com. - Go rate shopping
Too many inquires can damage your score. Generally, six or more inquiries within a six month period of time will scare a lender. Fortunately, multiple inquiries from auto or mortgage lenders are treated as one and have little impact on your credit score. - Assume there’s a grace period
If your payment is one day late, it is late. Even one late payment can negatively impact your score and remain on your credit file for seven years. - Close long term accounts
Closing old, unused accounts could hurt your credit score by shortening the length of your credit history. Long term accounts demonstrate a responsible history with credit. The longer you have an account the stronger your credit score. - Cosign your credit away
Cosigning a loan has many risks and little reward as any late payments by the primary borrower appear on your credit report. Plus, the cosigned loan could change your debt-to-income ratio, making it harder to qualify for future credit.
Of course, doing the exact opposite will go a long way toward positively impacting your credit score. Just remember that protecting your credit score takes diligence and discipline.
Jonathan Denissen, Alamo Title
Jonathan is the Marketing Representative for the local Alamo Title in Katy, Texas. He is a wizard at providing end solutions to top agents and lenders to help them do their jobs more efficiently.
You can contact Jonathan at:
281-398-3333
jdenissen@alamotitle.com
http;//www.alamotitle-houston.com
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