Guest Post By: Paul Smith
A belief among consumers these days is that bankruptcy or foreclosure will harm their credit score and it will go on for consecutive seven years. While this is a true fact but there are many more such common blunders most of us make which pulls down our good credit score of 750 into a mediocre level.
Few such common blunders are discussed below as your ready reckoner :
Avoid creating multiple accounts at one go: Even if the credit card company is offering lucrative incentives & perks with every new card don’t fall for that since it will induce a hard inquiry that is going to appear in your credit report. A single hard credit inquiry devours your score somewhere between three to five points and remains in your report for about two years causing an adverse effect most of the time.
Don’t lag on payment dues: Not paying monthly bills on time will have severe effect on your credit score deducting almost 100 points from an erstwhile star performing credit report. If your are not a regular defaulter then contacting your creditor to delete that record will save you from a negative impact. The creditors are more than willing to help you in this regard.
Think Twice before terminating your older accounts: This is important when your about to shop for new credit. Your credit score will have drastic dip if you close such old accounts because it lowers the ratio of credit to debt use (It means the amount of credit usage against the amount of credit you have in hand).
Beware of crossing the limit of a credit card: Again, it is important to note that crossing the maximum credit limit of a single card will enormously increase the ratio of credit use. However it will affect you on the basis of your entire credit report. So, it is wise to clear all the dues as soon as possible to negate the harmful effect of it.
Be alert & vigilant: Each one of us must go through our free annual credit report to find out any discrepancy in our report and inform the authority concerned to rectify the wrong data in the report. Any kind of sluggishness on our part will have a direct impact on our credit score. Moreover, it is rampant to find mistakes in credit reports and these mistakes are very difficult to delete and make the report impeccable.
I have discussed few of the most common points here is this article. However, I would suggest every reader of this article to gather as much information as possible to deal with the credit reports. Since, everywhere you go and look for finance, a lender will ask for your credit score first. Even if you have gone bankrupt and opted for debt relief solutions, a good credit score will help you to bargain for the best deal.