Thursday, March 8, 2012

What Can Really Affect Your Credit Score in a Bad Way

1) Opening Too Many Accounts at Once
Credit card sign-on bonuses are certainly enticing, but you
shouldn't be signing up for every card that's offering some cash back. This is
because each application and subsequent credit pull will generate a hard inquiry
that will appear on your creditreport.
2) Missing One Payment
One missed payment may seem innocuous enough, but in reality a
single delinquency can cost a previously stellar credit score to fall more than
100 points. The good news: As long as the missed
payment doesn't lead to additional woes, your score will start to rebound relatively quickly
and it can get back to good standing in about 12 months following the
delinquency
3) Closing an Old Account
You should think twice before officially closing that credit
card you opened back in college, especially if you're getting ready to apply for
a new line of credit. Closing an old account can have a negative impact on
yourcreditscore since it can lower your credit-to-debt utilization ratio, which is
essentially how much credit you have at your disposal versus how much credit you
are actually using
4) Maxing Out a Single Credit Card
As MainStreet has previously reported, it's never a good idea to
bump up against your overall creditlimit because your credit
utilization ratio will appear sky-high. However, maxing out a single card can
negatively influence your credit score as well.
5) Racking Up a Bill Right Before Your Statement
Closes
Credit card issuers typically only report two things to
creditbureaus each month: whether
you're up-to-date on all your payments and what your balance at the time is. As
such, running up big purchases right before your statement closes – and the
issuer reports the information – can negatively impact your credit-to-debt
utilization ratio and subsequent score, regardless of whether you go on to pay
off that balance on time or not.
6) Not Checking Your Credit Report
Even if you're not particularly credit active, it's a good idea
to take advantage of the free annual credit report the Fair Credit Reporting Act entitles you to, if
only to scour it for incorrectly attributed delinquencies, accounts or
inaccurate balances, which can all do varying amounts of damage to your score.
This is because errors on credit reports are all too common. As MainStreet has
previously reported, about 30% to 40% of all credit reports have some
type of error on them, some of which can unfortunately be difficult (and
time-consuming) to remove.
7) Ignoring an Account That Has Gone Into
Collections
You may think that you don't owe that unpaid medical bill that
keeps getting sent to your house, but your score is still in jeopardy if you
decide not to pay it. Many places that don't lend money, like a hospital or
cable company, will send their unpaid bills to a collections agency after a certain amount of
time
and they will report you to the credit bureaus.
Similar to a missed mortgage, credit card or auto loan payment, this delinquency can cost good scores 100 points or
more.

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