Did you know that your credit score is inspected by more than just lenders?
When you apply for a job, purchase insurance or try renting a property, your credit report will most likely be pulled, says Kurt Wuertzer, a senior lending consultant at Dupaco.
"It's used for things you don't even think about," he says. "So you certainly want to make sure you keep your score up."
Here are some of the more common credit mistakes consumers make:
- Racking up large credit card bills - even if you pay them off. When you have large balances on your credit card, it takes away your capacity (how much credit you have at your disposal versus how much credit you are using). "The more credit you have available, the better off you are," Wuertzer says.
- Missing one payment. A single delinquency can cost a previously stellar credit score to fall more than 100 points, according a recent Yahoo! Finance story. "Missing a payment is very hurtful," says Cindy Hilkin, a loan consultant at Dupaco. "Whether it's a $5 credit card payment or a $1,000 mortgage payment, being late one time, no matter the payment size, will equally hurt your credit."
- Closing old accounts. Think twice about closing out an old credit card, which you've always paid off on time, simply because you rarely use it. Not only does this hurt your credit score from a capacity standpoint - you're taking away available credit - but it also removes a valuable credit reference. "Here's a credit card with maybe 15 years of great payment history, and you've just knocked off that reference going forward," Wuertzer says.
- Opening too many accounts at once. It's OK to open a new credit card here and there, but don't go overboard. Each application and subsequent credit pull generates an inquiry that appears on your credit report, which can negatively affect your score.
- Not checking your credit report. Take advantage of www.annualcreditreport.com, which allows you to request a free credit report once every 12 months from each of the three credit reporting bureaus. You should have an inkling of where your credit stands, and know whether there are mistakes or other issues that need to be fixed. "You don't want to walk into a situation where you're applying for something and can't get approved," Wuertzer says. "Maybe it's an error that you can get fixed, but you'd like to know about that ahead of time."
By Emily Kittle