Perhaps your credit score needs a boost after obtaining debt relief through a Chapter 7 or Chapter 13 bankruptcy. Or you may want to strengthen your score to get a better rate on a home mortgage or auto loan. Whatever your goal, here are a few bad habits to watch for that can hinder your efforts when trying to increase your credit score.
3 Errors That Hurt Credit Scores
1. Carrying a Credit Card Balance or Maxing it Out
When you make credit card purchases and carry a balance over to the next month, you pay the company interest on that unpaid balance. It’s better for your credit score and debt relief efforts if you don’t charge more than you can afford to pay in full each month. Don’t use your card continually to its limit because that counts against your score.
2. Only Using Cash
If you use cash for all purchases, your credit score takes a hit. Worse yet, you may not have established a credit history at all. By not charging purchases or taking out loans, you’re preventing lenders from knowing you can borrow and pay back funds successfully, which will make them less likely to extend credit to you.
3. Only Using One Form of Credit
You might think you’re playing it safe and building your credit score by having only one credit card for all your purchases. However, lenders favor consumers who carry a variety of credit types. Your score is based on several aspects, and 10% depends on your ability to manage different types of credit. Taking out a small line of credit, a car loan, or a signature loan and paying them on time can boost your score.
If you want to raise your credit score, consult Greg Dunn, Bankruptcy and Debt Relief Attorney. Over the last 23 years, he has guided thousands of clients in Honolulu, HI, through challenging debt problems and helped them achieve a firm financial footing. Learn more about his debt relief services online, and call (808) 524-4529 to schedule a free consultation.