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The 38 Mistakes Most People Make With Their Credit

  1. Not knowing your three FICO Credit Scores from TransUnion, Experien and Equifax
  2. Purchasing the Wrong Scores - Each credit bureau markets their own properietary scores.  Do NOT purchase their own scores, be SURE to get the FICO Credit Score
  3. Having Unnecessary Credit Inquiries as inquiries remain on your report for up to 2 years and do count against your score for 1 year
  4. Maxing out your credit cards each month - a BIG no-no!
  5. Not asking for a Lender's Credit Guidelines report before applying for credit.  Ask questions!!
  6. Leaving a balance on your credit cards each month - your score will go up if you pay all credit balances off each month
  7. Assuming your lender shares your payment history with the credit reporting agencies, some report only to one or two if they do at all
  8. Doing aimless rate shopping - if you shop a mortgage, car loan or insurance, be sure to do it within a 14 day period as they then count only as one inquiry
  9. Acquiring your credit reports from a third party.  Make sure you purchase from www.myfico.com/12
  10. Using finance companies - will lower your score when compared to using a bank or credit union
  11. Closing credit accounts - will lower your score because your credit to credit available ratio will go up
  12. Believing that a high income will overcome a bad payment history - NOT!
  13. Ignoring the relationship between your credit report and your insurance rates - scores do affect premiums
  14. Co-Signing for another person -  Very RISKY!
  15. Thinking a bank debit card helps your credit rating -does not as it's just like writing a check
  16. Using cash only - Will not increase your scores
  17. Allowing a collection account to appear on your credit report - if you are in this position, before you pay it off, try to negotiate with the lender to remove the account from ALL 3 AGENCIES
  18. Assuming a loan reports the same as a line of credit - a home equity loan is safer because it will report as an installment loan whereas an equity line of credit is considered a revolving debt, which is a problem if you carry a high level of debt
  19. Transferring credit card balances to get a better interest rate - any new credit inquiry and any new account will lower your score
  20. Not having a major credit card - you are considered a higher risk if you do not have a Visa, MasterCard, American Express or a Discover card issued from a bank
  21. Having too many credit inquiries
  22. Paying off installment credit accounts early - the longer you hold an installment account in good standing, the higher your scores
  23. Ignoring your "Negative Reason Codes".  These codes explain why your scores are not as high as they could be and, more importantly, what you can do to increase them
  24. Not increasing your credit limits - your percentage of credit used against available credit is reduced, thus increasing your scores!
  25. Improperly dividing debt in a divorce - talk to your legal advisor
  26. Ignoring mistakes on your credit reports
  27. Having "Negative Narratives"
  28. Applying for credit at the wrong time - if your are purchasing or refinancing a home be sure to wait until after the closing to apply for any other credit
  29. Using your personal credit for business
  30. Believing in debt consolidation loans
  31. Believing you can force a creditor to report your payment history - Be sure to ask them and if they won't, find a new lender
  32. Accepting pre-approved offers  - always ask for the credit guidelines first
  33. Having credit but not using it
  34. Not having a mortgage
  35. Adding a consumer statement to your credit reports - don't, it won't improve your scores and may verify the negative information
  36. Having recent late payments
  37. Having lenders that won't report your credit limit
  38. Having too much of one thing - make sure you have a healthy mix of credit

 

 


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Deb Casper