7 Bad Assumptions That Hurt Your Credit Score
Some people make an inappropriate assumptions about the best way to enhance credit rating and the way to improve credit scores. Don’t think that your assumptions are right.
Bad Assumption #1: Lower optimum card limits improves the credit score of mine.
Credit scoring programs don’t penalize you for having higher credit limits. Nonetheless, they certainly penalize you for having huge balance relative to your limits. A $2,000 balance on a card with a $2,500 limit greatly lowers the credit score of yours. Nonetheless, in case you raise the limit to $10,000 on the same card, a greater credit score results as you look less “maxied out” on the credit cards of yours. Moving that balance to a more significant maximum restrict card may also improve the score of yours.
Poor Assumption #2: Always paying the minimum will result in a great credit rating.
Naturally not paying the minimum will negatively affect your credit score. But, paying that minimum will not usually cause an excellent score either. The main key issue is keeping your reported exceptional balance low family member to the optimum credit limit. Keeping your balance at less that ten % of the optimum limit is good. A balance over fifty % of the maximum could dramatically reduce the credit score of yours.
Poor Assumption #3: Always paying by the due date will result in a good credit score.
Clearly paying late will reduce the credit score of yours, but it entails much more than timely payments to get a very high credit rating. Why wait to buy a paper copy of a bill. Go on line 3 times a month, review the credit charges of yours, and also pull in on line payments. Thus you are not late. There’s much less possibility of good identity theft since you see-the charges earlier, much more often, so you can take corrective action earlier.
But above all the reported balance to credit repair services for free reporting agencies is reduced. What normally gets reported on the credit companies is the balance on the paper bill. Reducing this balance by paying before the bill is produced will improve the debt ratio of yours and the credit score of yours.