3 Surprising Things That Hurt Your Credit Score

Don’t cut up your credit card until you read this!

A lot of people, trying to do the right thing, end up hurting their own credit score.

Don’t make one of these common mistakes, because doing so will take points off your score.

Mistake #1

Closing a credit card that has a balance.

This reduces your score, because you have now lowered your debt-to-available credit ratio. If you don’t want to use the card any more because it has an annual fee, pay it off first, then close it. If the card has no annual fee, pay it off and lock it up. By keeping the available credit open, you help your score.

Mistake #2

Having a high balance.

If your credit card is close to the limit, your credit score is being severely docked. This is one of the worst things you can do to your score (besides paying late). Even if all payments are made on time, having a high balance-to-limit ratio hurts your score. Fortunately, this is an easy fix. Once you pay down the card, your score goes up. I recommend keeping your balance below 30 percent of the limit.

Mistake #3

Closing down old credit cards.

Don’t need those old cards anymore? That’s okay, just let them set unused. Cut them up if you like, but don’t close the account. 15% of your credit score comes from length of time you’ve had credit. Longevity is your friend.

How Much Credit Do You Need?

If you have three accounts, you have enough credit. That would be one auto loan, one student loan, and one major credit card. Or two major credit cards and one auto loan (paid off still counts). More about how much and what type of credit to get in another post.

Thank you for reading my blog. I help people increase their credit scores through education and smart strategy.


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