Those two little words can ruin your ability to get a car loan, buy a house, or cosign for your children’s student loans.
But don’t worry, you’re not alone. Almost one-third of Americans suffer from bad credit which is a credit score under 600.
The first step to great credit is knowing what helps and what hurts. Check out the top credit mistakes and how a credit repair service can fix your credit score.
1. Maxing out Your Credit Cards
Maxing out your credit cards is one of the top credit mistakes.
By maxing out your credit scores, you’re raising your credit utilization ratio. And this ratio accounts for almost one-third of your credit score.
Speaking of credit cards, you should avoid those store credit cards.
While the extra 10 percent off your purchases may seem like a steal, every card you apply for adds another hard inquiry to your credit score. And all those hard inquiries add up and hurt your credit score.
2. Closing Old Accounts
Wondering how to fix your credit score? Stop closing your old accounts.
It may seem logical to close an old account that you aren’t using anymore but resist the urge. When you close an old account, it immediately hurts your credit score.
Closing an old account lowers your available credit which hurts your credit utilization ratio. Also, closing an older account lowers the average age of your accounts.
3. Avoiding Credit
The answer to how to fix bad credit isn’t avoiding credit altogether. In fact, no credit score hurts your financial standing just as much as a bad credit score.
It’s important to start credit early in your life. This can be as simple as getting a small credit card or being a cosigner on an older relative’s account.
If you’re older with no credit don’t worry. The only way you can further hurt your credit score is by continuing to avoid it. Everyone has to start at some point. It’s better late than never.
4. Paying off Old Collections
Wondering does paying off collections improve credit score? The answer is surprisingly no.
The older a collection account is, the less it impacts your score. So that old medical bill from 10 years ago isn’t hurting you as much as you think. But the minute you make a new payment, the old account becomes current and starts to really hurt your score.
So instead, speak directly with the collection agency. Make an official request for them to show you proof that you owe the debt in question. If they can’t, you may be off the hook.
If they do provide proof, save up enough money to get rid of the debt all in one payment instead of making several smaller payments.
How Credit Repair Can Fix Your Credit Score
Don’t worry if you’ve made any of the above credit mistakes. There are credit repair services that can help fix your credit score.
Companies can help improve your credit score by disputing bankruptcies, late payments, and tax liens. They work by correcting incomplete and inaccurate information on your credit score.
Find a credit repair company with great reviews that will work hard to repair your credit until you are 100 percent satisfied.
Key Point Credit Services does just that. Start an introductory credit service consultation today.