Credit scores range between 300 and 850. A high score indicates superb credit habits. A good credit rating qualifies for you for the most competitive interest rates on mortgages and other loans. Keeping a good rating involves avoiding habits that can harm your score.
High Balance
Carrying a credit card balance alone doesn't hurt your credit score. On the other hand, if you carry high balances, have maxed-out accounts or exceed your credit limit, expect a dip in your credit score. To be on the safe side, keep balances below 30 percent of your credit limit. On a credit card with a $2,000 credit limit, your balance should never exceed $600.
Late Payment
A payment that reaches your creditor a few days after your due date may not affect your credit score. On the other hand, being 30 or more days late on your payments may prompt the creditor to report this information to the credit bureaus, and having a late payment on your personal credit file can reduce your credit rating. Always pay on time to keep a good payment record and credit rating.
Canceling Older Credit Cards
In an effort to control debts, some people cancel their credit cards. This seemingly innocent maneuver can significantly damage your credit rating. The length of your credit history influences credit scoring, and canceling an older credit card can reduce your credit history and bring down your score.
Multiple Inquiries
Credit scores decrease every time you submit a credit application and a creditor checks your credit report. This includes credit checks for instant credit approvals offered by department stores and other retailers. Only apply for credit cards and loans when necessary to avoid harming your credit score.
Co-signing Loans
Co-signing a vehicle loan or personal loan can help someone get on his feet and establish a credit history. However, a co-signed loan appears on your credit report. You're responsible for the debt if it isn't paid, and late or missed payments may cause your credit score may suffer.
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