Taking care of your credit may seem like a tricky thing to do. There are many instances in which you can pull down your credit scores; not paying your accounts or maxing out your credit card are a few of these. Sometimes what you thought could be beneficial for your credit is also the one killing it. Thus, it really takes an extra mile of care when dealing with your credit. To keep you from committing the same blunders that have the greatest likelihood of killing your credit scores, I’ve listed here five of the biggest mistakes you make that kill your credit.
Credit Blunder #1: Missed Payments
Missed payment, being a factor that kills your credit, is a no-brainer. A credit expert is not required to explain it to you why missing a payment has a negative repercussion on your credit rating. Credit companies would look at your credit history to ascertain your capability to pay for your credit obligations. If you frequently missed payments previously then there’s also great likelihood that you’ll miss payments in the future. Furthermore, if you habitually make late payments your credit score will be off by 60-110 points.
Credit Blunder #2: Maxed Out Credit Cards
Maxing out your credit card does not bring any good to your credit score and would deduct it by up to 45 points each cared. This is among the common blunders that a lot of people commit. To loan companies, maxing out your credit card would imply that you are thoughtless when it comes to managing your finances.
Credit Blunder #3: Closed Credit Card Accounts
If you think that closing your credit card account would help boost your credit rating then it absolutely is just a myth. Lenders and other loan companies are usually in favor to those who have long credit history. This is because those with shorter credit history are tagged as risky borrowers. You should also keep in mind that 15% of your FICO score is taken from your credit history.
Credit Blunder #4: Foreclosure
Foreclosure is another bad thing you should veer away from especially if you’re trying to get a mortgage. If you have any foreclosures in your credit history, you could lose anywhere between 85 and 160 points which is something hefty if you try to reckon. Given this circumstance, it would be hard for you to regain a good credit score.
Credit Blunder #5: Bankruptcy
Are you looking for a fast way to ruin your credit score? File for bankruptcy and you’ll right away lose up to as much as 240 points from your credit score. This is also by far the worst thing that could happen to your financial history.
Now that you learnt some of the biggest mistakes that could kill your credit, it becomes easier for you to deal with your finances and boost your credit score.