I’ve had several people ask me in passing, “what are some easy to follow tips to make sure I am set up for success with respect to my credit?” Well, ask and you shall receive. I have decided that for this week’s blog entry, I am going to layout some simple rules to follow in the credit arena. This are applicable whether you are looking to increase your scores from a rebuilding standpoint or from a standpoint of preserving your already maximized score.
Let’s start with a few mainstays that you should always be mindful of. First and foremost, make sure you always know your payments dates and in turn you make your payments on or before these dates. Late payments can cripple a credit score much quicker and more detrimentally than one would think. Secondly, always keep your revolving balances below 30% of your credit limit. This is crucial as anytime you exceed 30%, you will actually lose points. Finally, it is important to maintain a good blend of different types of accounts. In a perfect scenario, you would have a mortgage, an auto loan, a credit card and a student loan account, all of which in good standing.
Now let’s explore some habits you should strive to avoid. First off, do not close accounts that have been active for some time with good payment history. Contrary to popular belief, closing old credit cards will lower your scores. Secondly, I would strongly urge any of my clients to avoid working with any debt consolidation companies. These companies do not help your scores for many reasons and ultimately, you are paying someone to pay your bills for you. Finally, before paying off all collections, make sure you call us and speak with one of our credit experts. 99% of the time, making a payment on a collection will actually lower your scores as the dollar amount is not a variable of the algorithms used to calculate your scores.
Implementing these simple rules will help you maximize your credit scores and simultaneously safeguard yourself against any negative effects that you may not have known to be a variable.