What Things Can Hurt Your Credit Part 3
Welcome back. These are the last five things that can hurt your credit score that we are going to go over.
1. Closing credit cards that still have balance. Why is this bad? Well, when you close a credit card that still has a balance, your credit limit drops to $0 while your balance remains the same. This makes it look like you’ve maxed out your credit card, which in turn will cause your score to drop. Even if you don’t use the card anymore, keep it open. I tell people that if you don’t have the discipline to abstain from using the card, cut it in half. This will force you not to use it.
2. Don’t close old credit cards. 15% of your credit score is the length of your credit history. Longer credit histories are better. When you close old credit cards, especially your oldest card, it makes your credit history seems shorter than it really is. Again, even if you don’t use them, keep them open.
3. Don’t close cards with available credit. If you have several cards and some have balances and some do not, closing the cards without balances increases your credit utilization. In other words, you are a better credit risk if you have low or zero balances.
4. When you apply for several credit cards or loans, this will lower your score. Credit inquiries account for 10% of your credit score. Making several credit or loan applications within a short period of time will cause your credit score to drop. Keep your new applications to a minimum.
15. You want to have a mix of credit cards and loans. A mix of credit is 10% of your credit score. When you have only one type of credit account, your credit score could be affected. This really comes into play when you don’t have a lot of credit history. Again, you don’t want to have a lot of balances, but you need a mixture of credit history.
During the next month, we will go more into detail on these subjects. For now, try to follow these as close as possible. Spend within your means and monitor your credit carefully. For any questions, call the credit experts at (800) 222-0233. A free consultation is a phone call away.