Don't Hurt your Credit Score by Making These Mistakes

When you pay your bills, you can make a decision to kill your credit score or help it, or at least help you rebuild it.  “Most people have wrong or little information about how the system works, and that’s a big reason scores go down when difficult decisions are made during a recession,” said Eddie Johansson, of Credit Security Group.  Here are common misunderstandings that could lower your credit score, as reported by RISMedia.com:

"1. Paying late didn’t hurt my credit since I’m caught up now. Johansson said recent late payments are the credit score killers he sees most often. 'It’s great that you caught up,' he said, 'but it doesn’t change the fact that you paid late. Anything other than ‘paid as agreed’ on accounts on your credit report hurts your score.'

"2.  Dollar amounts matter in credit scores. An example of bad credit score advice here is 'pay the highest bill first,' Johansson said. 'Dollar amounts don’t matter in FICO scoring; ratios and recency do. The effect on your score is the same for a $1 late payment as a $1,000 late payment. The fewer late payments on your credit report, the higher your score—regardless of their dollar amounts,' he said.  If you must pay late and want to avoid damage to your score, pay the accounts that report to credit bureaus first. You can find this information by getting a copy of your credit report.

#3.  Closing credit card accounts helps your score. If you cancel a card, you may have just thrown away your chance to increase your score by continuing to build on years of positive credit. 'Very long term positive account history can really boost your score,' Johansson said. 'It’s best for your score to keep cards open and active, using them for small purchases. Next best is to just keep them open so you can build your score back up quickly by using them later.'

"4.  Don’t make a bad situation worse. In tough economic times, people often buy more on credit than they usually would. The amount they pay in interest on these purchases is largely determined by their credit scores. Poor decisions that lower scores combined with an already tight budget can be very costly, making money problems worse than they have to be."

Good credit is an essential element of financial security.  If you are having problems paying the mortgage on your Mercer County home, call or contact me before you get too far behind.  You have options if you act early enough.

Joe Giancarli, SA
Short Sale Specialist
Real Estate Advisor
609-658-2612
jgiancarli@remax.net
http://www.joegiancarli.com/
http://www.njhomesource.com/
http://www.newjerseynewhomes.blogspot.com/
www.activerain.com/blogs/josephgiancarli

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