Seven Ways To Damage Your Credit Score

As mortgage professionals, we feel it is of the utmost importance to inform our customers as to the significance of their credit standing and how it affects their capacity to obtain a mortgage and, even worst, affects the cost of borrowing, especially in these uncertain economic times. Making some of the following mistakes can ensure that lenders will put on a hazmat suit to handle your credit report. Remember the good old days, way back in 2007, when the streets were paved with Credit- Gold as far as the eye could see and credit cards rained from the sky? Even the credit- destitute were treated like kings by credit card companies and courted with lavish offers of unlimited credit. Here, in the future, the world has changed.

And woe betides those who ask for loans with glaring blemishes on their credit reports. An unpaid collection is apt to be regarded like a cockroach in the consommé. What affects your credit score and in what proportion? 35% - Your paying habit 30% - Amounts owed 15% - Lenght of credit history 10% - New credit 10% - Types of credit used The Seven Pitfalls to Avoid 1. Close credit card accounts 2. Let credit cards collect dust 3. Run up high balances 4. Apply for new credit repeatedly 5. Don’t pay fine on non-credit-card bills 6. Ignore mistakes on your credit report 7. Make late payments or skip them all together SO, WHAT TO DO? * Close credit card accounts If you intend to close some credit card accounts, remember that only recently opened accounts should be considered for closing. Length of credit history is an important component of the credit score; therefore, it’s not a good idea to cancel a source that has been long-held since payment history can have positive implications for your credit rating. * Do not let credit cards collect dust It is suggested that people use their cards periodically. Burying cards in the backyard or hoarding them in a shoebox in case of an emergency may also backfire. Consumers encounter two pitfalls if a creditor closes an account for non-use: The available credit is pared down and that account no longer contributes to their credit history.