TIP of the Month - FEBRUARY, 2008

TOP 3 CREDIT SCORE MISTAKES YOU DON'T WANT TO MAKE:  

1) MISSING A PAYMENT : WE ALL KNOW BEING "LATE" CAN HURT YOUR CREDIT, BUT MANY PEOPLE DON'T REALIZE JUST HOW MUCH IT HURTS. Being reported as delinquent in paying your bills is the biggest whammy for your score", said the credit bureaus. A single late payment could drop you as much as 100 points, especially if your credit history has been good up to that point. Anything above 720 is considered good. The wild thing is that good payers are punished the most. The bad news is that these days some creditors will report a late payment even if you were late by a say or two.

2) MAXING OUT YOUR CARDS: So you have perfect payment history and you are never late and yet you still have a less than average credit score? What gives? Well you can lower your score from an excellent category to a good or fair category simply by using most of the credit available to you. To avoid mistakes, be sure to ask your credit card companies for the highest limit they'll five you. (Not because you want to use all that credit up, but it can actually improve your score because you won't be maxed out.)

3) CLOSING CREDIT CARDS: Many people think closing unused credit cards will improve their credit score. Quite the opposite: Closing unused accounts in fact decreases your score. Why? You're eliminating a chunk of available credit which then automatically increases your credit utilization, or how much of your available credit you're using. Credit utilization is responsible for a hefty 30% of your credit score, so the effects of closing a credit card with a generous limit could be pretty severe.

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