Whether to buy a car, apply for a loan, or make an offer new house, there is one number that can have a big impact on major transactions. It’s your credit score. Unfortunately, even those who manage their personal finances sanely can have surprisingly hard time raising their ratings and staying there.
“A credit score is a mathematically derived value that lenders use to assess an individual’s credit risk when evaluating new credit applications,” he explains. Jeffrey StaufferCertified Financial Advisor, and financial expert Just an answer. “But credit scores can also be affected by other factors that aren’t easily seen.”
Want to get your number in the right place? Read on to discover 7 hidden things that affect your credit score, according to financial experts.
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1
It’s too early to give up your credit card
Those who have managed to get out of a mountain of debt know that finally making the last payment with a credit card is incredibly liberating. can feel appropriate. However, experts warn that it’s better to wait a bit before bringing the scissors to the plastic.
“Paying off your credit card debt is a big milestone worth celebrating. please do not.” household expert Andrea Warlock To tell best life.
“The amount of time you have had credit, also known as credit history, affects your credit score. That’s why you should keep your old accounts open. Set it to pay and keep it active,” she suggests.
2
pay the bill on the wrong date
It’s true that paying your bills regularly and keeping your spending in check will help keep your credit score in check. But it can also affect exactly when payments are sent, and the overall amount of debt at that time, according to experts.
“When your credit card statement closes each month, you can also significantly improve your credit score by having a low or zero balance,” he says. Robert Farrington,Founder university investor“For example, if your statement closes on the 15th of each month, pay it in full on the 10th. That way, when your balance is posted, you’ll see $0 used and can improve your credit score.” I can do it.”
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3
Not keeping your credit card balance low enough
We all know that using credit cards is risky if you can’t afford to pay what you pay. But even with your purchases in check, your overall balance, while well below your cap, is still a bit high, and your score may be hurting in the process.
“Credit scores are based on credit types,” Stouffer explains. “Revolving credit accounts are more impactful because this type of account is constantly changing. Your credit card may be maxed out, which can cause your score to drop significantly and your balance to drop. will only improve, typically less than 30% of available credits, which is the upper limit allowed, beyond which your score will drop.”
Four
don’t have a mortgage
The decision to buy a home can be one of life’s most important financial decisions. Of course, having a good credit score is essential to get into the process. After all, taking out a mortgage can also boost your credit score in the long run, according to experts.
“Term loans only show payment patterns and a reduction in loan balances,” says Stoffer. “A lack of mortgages means the place of residence has no permanent foundation, so it keeps the score low. You can have history, some accounts can be active, some people can pay in full and never be late on payments, but you don’t have a mortgage, so this person ‘s rating will not be able to reach the highest possible score for these reasons.”
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Five
Checking your credit score too often
Arguably one of the most frustrating parts of trying hard to keep your credit score up is that every time you’re scrutinized by a potential lender, it can affect your hard-earned numbers. That’s it. But experts say staying aware of how others check your score is one way to keep it as high as possible.
“When you apply for credit, the lender will typically review your credit history. This is called a ‘hard review’ and can negatively impact your credit score,” he said. Tommy GallagherFormer Investment Banker and Founder top mobile bank“But there are also ‘soft inquiries’ that don’t affect your credit score and are usually made by lenders for marketing purposes. Consent.” “
Gallagher points out that most personal credit score monitors use soft inquiries, an easy way to monitor unexpected hard checks that can occur in rapid succession. And while you may not be able to avoid multiple forms of financing with a major move or major lifestyle change, you can avoid applying for many credit cards in a short period of time.
6
being a victim of identity theft or fraud;
Today, everyone knows that their personal information is one data breach away from falling into the hands of someone who uses it in malicious ways. But while you can’t always control identity theft, regular monitoring for such breaches can keep your score significantly higher. This is one of the helpful hints that some experts say the general public is not practicing enough.
“If your personal information was compromised and used to open a credit account in your name, this could have a significant impact on your credit score.” It’s important to check your credit report regularly and be careful to protect your personal information.”
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7
I forgot to set up automatic payments
Technology has made some aspects of everyday life easier, but it has also made it a busier place in other ways. Sifting through the barrage of notifications can be difficult. So even if you consider yourself organized when it comes to paying your monthly bills, not automating the process can hurt your credit score.
“It’s easy. Never forget to pay,” says Farrington. “You can ensure this by setting up automatic debits, so your payments are always paid on time. Remember, all utility bills can hurt your credit if you miss even a small amount.”
Best Life provides up-to-date financial information and the latest news and research from leading experts, but our content is not a substitute for professional guidance. Always consult directly with your financial advisor regarding any money you are spending, saving or investing.
