We love seeing people earn high credit scores by practicing good credit habits. Unfortunately, Billy Bad Score is always lurking in the shadows, just waiting for someone to slip up by missing a credit card payment. Mistakes happen and credit scores sometimes suffer because of them. But we believe that a little knowledge can go a long way toward helping people achieve the credit scores they deserve. Here are some common practices that can actually hurt your credit scores, courtesy of MSN Money.
- Opening a department store card – In these tough economic times, there’s nothing wrong with looking for a deal. But unless you really need it, signing up for a store card just for a discount isn’t worth the risk. New card applications will initiate a hard inquiry on your credit report, which can lower your credit scores.
- Closing a credit card account – Saying goodbye to debt can be freeing, but cutting up your credit cards in celebration isn’t wise. 15 percent of your credit score is determined by the length of your credit history, so cancelling a card (particularly an older one) can shorten your credit history and damage your scores.
- Taking out a student loan – Because student loans are often reported as they are disbursed, a single loan may look like several smaller loans on your credit report. This may make lenders view you as someone who constantly needs to take out loans, which makes you a bigger credit risk. Consolidating student loans after graduation may help, but your credit scores may suffer in the meantime.
- Buying a motorcycle – Even though motorcycles are technically vehicles, the loans on them are treated differently. Motorcycle loans are usually treated as revolving credit, which means it looks no different than racking up a large credit card bill to lenders. Using the majority (80 to 90 percent) of your available credit will make lenders perceive you as a high credit risk, which will lower your scores.
By avoiding many of these seemingly harmless mistakes, you can keep your good credit scores intact. If you’d like to make sure that you’re the only one using your credit, FreeScore can help. With the Power of 3, you’ll receive access to your three scores and reports from the major credit bureaus, so you can check them anytime for signs of fraud. You’ll also receive 24/7 credit monitoring and automatic alerts that notify you if suspicious activity is detected on your accounts. And in the event your identity is stolen, we’ll connect you with licensed investigators who will guide you through the process of restoring your good name.
Every year I hear different New Year’s resolutions from people: eat less chocolate, exercise more, stop throwing things at the television during basketball season. Even though the resolutions are different, the results are all the same. People rarely make it past February before everything returns to the status quo. Unfortunately, their lack of resolve applies to me as well. This year will be different, however, so look out for a new, slimmer Billy Bad Score, with more hair on his head, in 2012! Okay, maybe not. But I still plan on fulfilling my other resolution: causing mischief for people who need good credit scores to have a happy New Year.
Around the holidays, people get carried away with their gift purchases. And once January rolls around, they’re staring at a credit card bill they can’t quite afford. All it takes is one late or missed payment and I spring into action. Lower credit scores lead to plenty of unwanted consequences such as getting denied for loans, credit cards and insurance. A bad credit score really is the gift that keeps on giving.
This is truly MY season. Halloween suits me well, since I’m already wearing this mask, lurking where you least expect me. Don’t expect me to give out any treats, though; this Bad Score is only full of tricks.
