5 Credit Score Mistakes You Should Never Make
Getting a personal loan requires a good credit score, unless you want to be paying high interest rates on your loans. A good credit score falls around the 650 mark or higher. Once you get your free online credit score, you will know how much work you need to do to improve your score. Steps to improve your credit can involve picking up a monthly bill or getting a secured credit card. However, there are some things you should never do when attempting to improve your credit.
- Do not close unused accounts. Credit scores look at how much credit you have available to you and how much of that available credit you are actually using. An unused account actually helps because it widens your credit base. Closing that account could have a decidedly negative effect on your score.
- Do not apply for a lot of credit cards. Although this might seem like a smart idea to improve your credit base before applying for a loan, do not try it. Although it might create a temporary lift in your score, creditors will register that you got all those cards around the same time. Furthermore, applying for a lot of cards means you might get rejected by some, which will also negatively affect your score.
- Do not move your debt around. Transferring the balance on an old card onto a new, free-APR-for-a-year card might seem like a smart idea, and it might even work. Before you try it though, make sure to read the fine print on both cards. Transferring balances frequently comes with a hefty fine. While transferring these amounts cannot affect your score, opening a new account can. So beware.
- Do not ignore your credit score. Each of the major credit report services is required to send you a free credit report once a year if you request it. More credit reports can cost extra money. Online services also offer to show your credit report, which can keep you up-to-date on any issues you might be having. This is the best way to watch your score and be able to dispute any misfiled credit issues.
- Do not make late payments. Saying “I forgot” will not work quite as well as it did when you were ten. Put a reminder on your calendar or an alert on your phone if you have to. Paying bills online can make it easier, but you will not have the reminder of a paper bill staring you in the face. Making one late payment can undo all the hard work you put into boosting your score.
Once your credit score is where it should be, look to San Diego Banking Rates to help you find the most competitive personal loan rates.
