Worst Things You Can Do For Your Credit

We briefly discussed in a previous post a few of the good credit habits that you should establish, but it’s also important to point out the bad habits! There are several things that you could be doing that are seriously damaging your overall credit score. If you are a recent college graduate, you may not have a lot of credit built up, so it’s important to start establishing good credit habits now!

Here are a few of the WORST things you could be doing for your credit:

  1. Max out your credit card. Although the companies seem like they’re trying to get you to use your card as much as possible, the lower your overall balance, the better! Your “debt utilization” rates are calculated by FICO and make up to 30 percent of your overall credit score! If you can spend 10 percent of your limit or less, this will help boost your points.

  2. Close an account with a balance. Yes, it is good to have fewer credit cards, but beware of closing an account! Make sure that you read the fine print. Sometimes, closing an account can negatively affect your credit score, especially if you still owe them money. Closing an account with a remaining balance can cause your utilization percentage to skyrocket.

  3. Going delinquent. One of the absolute worst things you can do for your credit is become delinquent on student loans or credit card payments. These late payments are recorded in your payment history forever- meaning anyone who sees your overall credit score can see your late payments. Lenders will not report you as “credit worthy” if you go delinquent on an account! If this does happen, do everything in your power to get caught back up as quickly as possible.

  4. Blowing off fines. Yes, this unfortunately includes speeding and parking tickets. Did you know that this can affect your credit? No matter what the fine, you always have the risk that a business or agency can turn the late ticket, fine or payment over to the credit agencies. This can, surprisingly, affect your overall score and be recorded on your history. Although paying these fines is something we dread, it will be worth it in the long run.

At Richard Banks & Associates LLC, we want you to be eligible to buy a house or a car without a hitch! Keep your credit score as high as you can, because you never know when you may need to reference it. Let us know if you have any questions; we would love to help. Have a wonderful week!