Avoid Causing Pain to Your Credit Score

Does closing a credit card hurt your credit? Does missing a loan payment hurt your credit score? Does debt consolidation hurt your credit? Does checking your credit score hurt your credit? These, along with many other questions are ones that you should know the answer to in order to get a better credit score and or keep your credit score high.

Do you understand what credit score is? Many understand the basics, it is a number based on financial relationships that you have had with significant companies, like banks and apartment complexes. For example, if you do not pay a bill, or you miss a rent payment, etc. then your credit score could drop. The more frequently these things happen, the worse your credit score becomes. The less this happens, the better your credit score. It’s simple enough right?

Here are some helpful tips and tricks to help you from hurting your credit score:

Build Credit

If you have never had a credit card or have never taken out a loan, chances are you aren’t building any credit. Banks are far less likely to grant you a large loan for a car or house if you don’t have any credit. It is always important to be building credit and improving your credit score. Talk to a professional to help you find the best credit building methods.

Zero Percent

Credit scores are weighted heavily on how much you owe on revolving accounts. For example, if you have a credit limit of $500 on your card and you have a $50 balance, then you are using 10% of it. Your goal is to stay as close to 0% as you can. Some will tell you to stay between the 30 and 50% range, but in the long run, the healthiest level is zero, as you don’t owe anything in that case. Consistent low percentages on your credit card will show the credit companies that you have a solid foundation and you are able and willing to pay your bills off on time. Note: Companies also look at all of your balance histories on all of your revolving accounts. In plain and simple words, pay your bills on time and if you use a credit card pay it off as soon as possible.

Pursuing New Credit Lines

Believe it or not, the more often you make credit inquiries the more you hurt your credit score. Keep these things to a minimum. These things will hurt you more than help you. Be careful picking what credit cards you use. Don’t sign up for a card just because the incentives you’ll immediately get. Talk to a professional to find the best credit card for your needs.

Closing Credit Cards

A big chunk of your credit score is based on the length of your credit history, so a longer credit history is better. Often times, 15% of your credit score is based on your credit history length. If you close a credit card, especially one with a long history, this will make your credit history look shorter. This is why it is really important to do your research and talk with a professional to find a long-term card that best fits your needs.

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