1. Closing Old Credit Cards
Age of File (or accounts) makes up 15% of your FICO score; Debt Utilization also makes up 30% of your score so by closing those old cards you lose potential points because you do not have as much credit available in addition to the fact that they will stop reporting and your long pay history will go away after 10 years.
2. Missing Payments
Missing payments is always a bad sign. Here are three ways it can hurt your scores:
- Frequency of Late Payments?
- How recent are late payments?
- Severity of late payments?
3. Settling With Your Lender on a Past Due Account
Settling an account is considered a “Major Derogatory Item” and just because it’s paid doesn’t mean it can’t still hurt your score.
4. Over-Utilization of Your Available Card Limits
High balances equal poor credit scores. Use your card less and pay them down as much as possible.
5. Excessively Shopping for Credit
Every time you fill out a new application, an “inquiry” in posted. Historically speaking, the more credit you shop for, the higher your credit risk.
6. Thinking That All Credit Scores Are the Same
There are over 100 different credit scores and scoring models so be aware of who the report is from, what the purpose is for, and the type of scores you received.
7. Thinking That All Credit Scores Predict the Same Thing
As confusing as number six is, the fact is that scoring models are all different. They can include:
- Insurance Risk
- Response Rates
- Revenue Potential
- Bankruptcy Potential
- Fraud Potential
8. Not Understanding Your Rights Under the Fair Credit Reporting Act
The FCRA act is a list of rules that govern lenders. Get familiar with your rights.
9. Not Knowing That You Have 3 Credit Reports & Corresponding Credit Scores
Most consumers don’t know that they have three separate reports gathered by three different and competing companies. The Credit Repairmen can help you compile this information.