There is a lot of information on the internet regarding ways to repair, maintain, or restore your credit score. Many are actual legit information that you can use, while some others are just misinformation. Listening to advice from friends and family can be just as bad since there are so many conflicting opinions.
There are moves you are thinking about that are seemingly innocent in your eyes but can harm your credit score. You may not realize it at the time but the fall out could be worse than you expect. Knowing which of these mistakes you can avoid will save you from a lot of anguish and headache in the future.
Maintaining a zero score on your credit cards
There is nothing wrong with paying your debts fully and on time as you do on credit cards. However, paying your monthly credit card dues and keeping a zero score does not help your credit report any. Paying off your credit card every month will not be a factor in your credit utilization rate. Oddly enough, leaving a bit of balance on your credit card payments each month can help to increase your credit scores by helping to maintain the optimum credit utilization, while keeping your balance zero every month may lower your score.
Keeping your credit card balance high
This is the opposite of having zero balance month after month, and it has the expected results on your credit score. High balances on credit cards increase your utilization rate, and the higher the credit utilization, the less credit-worthy you are in the eyes of potential lenders. A high credit card balance can increase your utilization rate to more than 35%, more than the maximum rate to be considered a low-risk borrower. This could result in higher interest rates when you apply for loans and overall a more difficult financial situation.
Lowering your annual percentage and closing old accounts
While it is possible to negotiate for a decrease in the annual rate on your credit card, this is only a good idea if you make sure that your creditor doesn’t lower your credit limit as well. If your credit limit is lowered, this will affect your credit utilization rate immensely and could lead to a drastic drop in your score. This is also what happens when you close old credit card accounts. It shortens your credit history, lowering the number of your established accounts, thereby also leading to a decrease in points.
Applying for new credit lines
This doesn’t mean that we urge you not to apply for any new credit. By all means, apply for one if you want. This simply means that you should never apply for too many new credit lines at the same time. This shows up in your report as hard inquiries and an unusually large number of hard inquiries on your report could be interpreted as you not being credit-worthy.
Our professionals at Blue Water Credit – San Francisco credit repair company have years of experience in the business and will be able to give you great advice and service on restoring your credit score. Reach out to the trained analysts employed by the top San Francisco credit repair company by going to Blue Water Credit now.