Did you know some of the things you might do thinking you are boosting your credit score may actually negatively affect your score?
Here are 4 Factors to Try and Avoid Doing if You Are Trying to Improve Your Credit Score:
- Paying Off Installment Accounts Too Soon – Financially, it might make sense for you to try and pay off a loan that stipulates you make monthly payments over a set term before the term is complete. However, doing so does not help you build up your credit history. It is more important you make your monthly payments on-time until the loan is fully paid off.
- Inactive Credit Cards – You should consider using your credit card for minor purchases on a monthly basis to keep your credit card active. Just be sure to make the payments each month.
- Too Many Credit Inquiries – There are two types of credit inquiries: soft and hard. A soft inquiry includes your own requests to see your credit report, as well as inquiries from companies who you currently have an account with. Soft inquiries do not have an impact on your credit score. A hard inquiry occurs when a potential lender requests your credit report for a new loan, cell phone plan, credit card, car loan etc. If you have too many hard inquiries in a short amount of time, this could indicate to potential lenders you are a higher risk.
- Lowering Your Credit Limit – Your credit utilization ratio is a percentage of how much you owe vs your available credit limit. A high utilization ration makes you seem like a riskier borrower to financial institutions.
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