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101 Powerful Tips for
Legally
Improving Your Credit Score
Avoid Common Credit Score
Mistakes
Page 2 of 2
First, if you
close an account you need (for example, if you close all your
credit card accounts) then you will have to reapply for credit,
and all those inquiries from lenders will cause your credit
score to actually drop.
Secondly, most
credit bureaus give high favorable points to those who have a
good long-term credit history. That means that closing the
credit card account you have had since college may actually hurt
you in the long run. If you have credit accounts that you don’t
use or if you have too many credit lines, then by all means pay
off some and close them. Doing so may help your credit score -
but only if you don’t close long-term accounts you need. In
general, close the most recent accounts first and only when you
are sure you will not need that credit in the near future.
Closing your accounts is a bad idea if:
1) You will be
applying for a loan soon. The closing of your accounts will
make your credit score drop in the short term and will not allow
you to qualify for good loan rates.
2) Closing your
accounts will make your overall debt balance too high. If you
owe $10 000 now and closing some accounts would leave you with
only $1000 of possible credit, you are close to maxing out your
credit - which gives you a bad credit rating.
In the short
term, closing accounts will lower your credit score, but in the
long run it can be beneficial.
Tip #16:
Don’t assume that one thing will boost your credit score a
specific number of points.
Some debtors
are lead to believe that paying off a credit card bill will
boost their credit score by 50 points while closing an unused
credit account will result in 20 more points. Credit scores are
certainly not this clear-cut or simple.
How much any
one action will affect your credit score is impossible to
gauge. It will depend on several factors, including your
current credit score and the credit bureau calculating your
credit score.
In general,
though, the higher your credit score, the more small factors -
such as one unpaid bill - can affect you. However, when
repairing your credit score, you should not be equating specific
credit repair tasks with numbers. The idea is to do as many
things as you can to get your credit score as close to 800 as
you are able. Even if you can improve your credit score by 100
points or so, you will qualify for better interest rates.
Tip #17:
Don’t think that having no loans or debts will improve your
credit score.
Some people
believe that owing no money, having no credit cards, and in fact
avoiding the whole world of credit will help improve their
credit score. The opposite is true - lenders want to see that
you can handle credit, and the only way they can tell is if you
have credit that you handle responsibly. Having no credit at
all can actually be worse for your credit score than having a
few credit accounts that you pay off scrupulously. If you
currently have no credit accounts at all, opening a low balance
credit card can actually boost your credit score.
Tip #18:
Never do anything illegal to help boost your credit score.
It seems pretty
obvious, but plenty of people try to lie about their credit
scores or even falsify their loan applications because they are
ashamed of a bad score. Not only is this illegal, but it is
also completely ineffective. Your credit score is easy to check
and not only will you not fool lenders by lying but you may
actually find yourself facing legal action as a result of your
dishonesty.
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