To get the best rates available when it comes to getting a credit card, loan, or mortgage, your credit score is the largest factor to deciding your approval, based on if you have a past of being a responsible borrower. With any of the three credit bureaus offering a free copy of your credit report once a year, it is important to review the information. It will cost extra for your credit score, but with most credit card companies offering your credit score on statements and online account information, you should be up to date on exactly where you stand, and are not hurting your score in the followings ways.
Late Payments
While being even a day late could cause a late fee and even boost your interest rate with the creditor, it does not report as being late on your credit report it is thirty days late, so do not let it get to that point and lower your score, as late payment could take up to seven years to come off. Credit report late payments are bad, but when you get to a loan or mortgage late which could lead to default or even foreclosure.
Maxing Out Credit Limit
A large part of your score is your debt versus credit availability, so as you start to max out towards your credit limit is when your score will drastically decrease, showing lenders that you are spending to your limits. While experts say to not carry more than 30% of your ceiling, ideally you would want to carry around 10%, of course zero being the target.
Not Checking Your Credit Score
Checking your credit report is important so you know exactly what is going on in your credit profile, no matter if you have already damaged, you do not want to continue to do so. Review the accuracy and be on the lookout for identity theft, making sure there are no open accounts that you are unaware of, making sure you dispute anything you see that has a negative impact where you can try to regain points lost. Using poor judgement on credit report errors can severely hurt you in the long run.
Too Many Inquiries
Remember every time a lender pulls credit on you it lowers your score, so be wise about you are applying for and only have credit pulled when you are serious about the inquiry, as an inquiry will take two years to come off your credit report.