In the midst of the holiday rush, it’s easy to forget that 2022 is right around the corner. With the New Year comes new resolutions. It’s time to start paying attention to your credit score if you want to tap into the hot housing market, buy a new car or work toward other credit goals. To improve the quality of your life, visit www.credithealing.org. In the meantime, here are 5 things you do that negatively affect your credit score.
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Even just one late payment
A single late payment can adversely affect your credit score. Even one payment more than 30 days late can negatively impact your credit score. That’s when credit card issuers are likely to inform credit bureaus of your delay. This could lower your score. So always pay your bills on time.
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Using your credit, too much
Your debt-to-credit utilization ratio can suffer if your balances are approaching your credit limit. You can calculate this ratio by comparing how much of your available credit you’re using to the total amount you have. Debt to credit ratios (below 30 percent) are generally preferred by lenders and creditors.
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Applying for more credit
Every time you apply for credit, from a mortgage to a store credit card, a hard credit inquiry is made on your account. Even if you’re not approved, hard inquiries affect your credit score. In a short period of time, opening multiple credit accounts may negatively impact your credit scores and cause lenders to view you as a higher-risk borrower.
However, there is one caveat: if you are shopping for an auto loan, a mortgage loan or a new utility provider, multiple inquiries are generally counted as one inquiry for a given period (typically 14 to 45 days, though it may differ depending on the credit scoring model).
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Canceling your zero-balance credit cards
Paying off the balance on your credit card is always a smart way to improve your credit score. But it’s still a good idea to hold onto a credit card even after you’ve paid it off. Cancelling a credit card can hurt your credit score in two ways: It reduces your total credit limit, which increases your credit utilization ratio. It can also shorten your credit history.
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Ignoring your credit report
Monitoring your credit report actively allows you to stay on top of changes to your credit report, such as possible suspicious activity. When you are monitoring your credit for suspicious activity or actively trying to reach your credit goals, a credit monitoring service is essential. Your credit monitoring service alerts you to new accounts and inquiries on your credit report. If you didn’t make these changes, there’s a good chance your identity has been compromised.
Good credit can unlock many savings and benefits, including access to loans and credit cards with the best terms. Learning how to maximize your credit scores is essential, as is identifying bad habits that may sabotage your efforts. Using a credit monitoring service will help you stay on top of your credit score’s ups and downs. Monitor your credit report today!
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