Credit reports and credit scores can be areas of such confusion, many tend to see imaginary dangers in the shadows. Many people believe that checking credit reports is a no-no, for example, because doing so may make FICO think that they are looking for a loan. This isn’t true. A drop in income, your age and signing up for credit counseling are also not factors that FICO looks at.
If you want to improve your credit score, you need to other areas.
Not keeping an eye on mistakes
You get a free credit report from each one of the three reporting agencies each year. It makes no sense to not take advantage. When you look through your reports, you may be able to spot mistakes that do not work in your favor. If there are reports about a late payment that was never late or other mistakes, you want to challenge them. It could help raise your score. If you don’t feel that you’re up to these things, there are services that can help you when repairing your credit. For about $75 a month, these services scour your credit reports on their own and make sure that mistakes are corrected as soon as possible.
Don’t get those easy store or gas station cards
Applying for a credit card takes a lot of planning and research. It isn’t supposed to be an impulse at the cash register. If you do give in to temptation, you need to know that applying for new cards always lowers your score.
Don’t put things on your card without thought
Carrying a balance on your cards is always a bad idea. It does weigh down your score. Many people know this but still make serious mistakes every now and then. Putting your income tax on a credit card is one of these mistakes that creep up on you. When you swipe a card at a store, it’s the store that pays the credit card company its interchange fee of 2.5% or so. When you swipe a card with the government, however, you are the one who pays that fee. Right away, you raise your tax bill by 2%. On top of this, you pay interest on what you owe for a long time until you pay it all off.
Buying things with your credit card for the rewards is another major mistake. Most people simply aren’t in control of their finances and are unable to plan when exactly they’ll pay off these debts. If you don’t have great control over your money, you shouldn’t play with rewards cards.
Finally, don’t ever max out your cards
You should never max out your credit cards, or even come close to doing so. The more you use up of the credit line available to you, the more desperate you seem to the credit rating agencies.
This is advice that is especially applicable when you need to file for bankruptcy. Many people trying to do it, max out their credit cards right before. They reason that their debt will be wiped off the record, anyway, and they might as well take advantage of whatever money is available on those cards.
This is simply a bad idea because when a judge sees that you’ve done this, your bankruptcy filing will be dismissed.
It’s important to treat your finances is an area that takes serious deliberation every step of the way. When you bring some seriousness to your finances, your credit score will simply improve.