In our most recent entry in our Credit Scores 101 series, we talked about credit score do’s—things you should do if you want to maintain a high credit score. In this installment, we will go over credit score don’ts. These are things you should avoid doing if you want your score to be high.
For a Healthy Credit Score, Do NOT:
- Be taken in by credit repair scams. If you see companies promising that they can instantly repair your credit for a fee, you should walk the other way. Not only will they cost you money, but they may actually make your credit score decrease with their aggressive methods.
- Dispute everything negative on your report. When you are making disputes with the credit bureaus, only dispute negative items that are inaccurate. Do not dispute all negative items. If some of them are legitimate, you will need to take other steps to raise your score.
- Allow too many hard credit checks in too short a timeframe. Be aware that the hard credit checks which some lenders run when you apply for a loan can damage your score. Always ask what type of credit check you can expect before you submit a loan application. You do not want repeated hard credit checks right before you apply for a mortgage.
- Close old credit accounts. Once you pay off a credit card you no longer want, you might be tempted to close the account, thinking that will help your score. But if you do that, you actually will make your credit utilization ratio worse, harming your score. So, it is better to keep your old credit accounts open, even if you never use your credit. If you want to avoid being tempted by the card for whatever reason, just lock it in a safe.
- Apply for a bunch of new credit cards. You might think that you should submit multiple applications for new credit cards in a bid to increase your score. But this will result in multiple hard checks as well, which will damage your score. Hurrying the process along in this manner thus might slow you down more than taking things gradually. Try and stick with one application at a time.
- Utilize large percentages of your credit, especially when you are actively applying for a mortgage. A lot of people do not realize just how big an impact credit utilization can have on their scores. It is easy to forget about especially when shopping for furniture for a new home. Try to avoid these types of major credit purchases before you apply for a home loan or during the process.
Home Buying in San Diego, CA with Community Mortgage
Now you know some actions you should avoid taking if you want to keep a high credit score. In a future installment in this series, we will share some credit score myths with you. If you have questions about credit while applying for a mortgage or you are looking for personalized recommendations, we can help. Please give us a call at (619) 692-3630.