Credit Tips
Most consumers understand that bankruptcy or foreclosure is going to tank your credit score and negatively impact it for the next seven years. But there are plenty of other smaller mistakes you can make that can turn a good credit score into a mediocre one. Here are some of the more common mistakes to steer clear of:
Open too many accounts at once: Credit card sign-on bonuses are enticing, but don’t sign up for every card that’s offering a reward as each application – and subsequent credit pull – will generate a hard inquiry on your credit report. Each hard credit card inquiry will cost your score between three and five points and stays on your report for two years.
Miss one payment: One missed payment may seem innocent enough, but in reality a single delinquency can cost a previously stellar credit score to fall more than 100 points. However, as long as the missed payment doesn’t lead to additional woes, your score should rebound relatively quickly and can get back to good standing in about 12 months following the delinquency. In addition, if the missed payment is indeed atypical behavior and you have a track record of making on-time payments, try calling the creditor to ask for a good will deletion.
Ignore an account that has gone into collections: You may think a bill is being sent to you in error, but ignoring it can negatively impact your credit score up to 100 points. Many places that don’t lend money – like hospitals, or the cable company – will send unpaid bills to a collections agency after a certain amount of time, and they will report you to the credit bureaus. Consider paying the questionable invoice in an effort to spare your score, then dispute the bill through proper channels to get it eradicated.
Don’t check your credit report: Errors on credit reports are all too common. Even if you’re not particularly credit active, it’s a good idea to take advantage of the free annual credit report the Fair Credit Reporting Act entitles you to, if only to look for incorrectly attributed delinquencies or inaccurate balances, which can do varying amounts of damage to your credit score.
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