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Damaging Your Credit Score and How to Avoid It

People often lower their credit scores accidentally due to all the confusion surrounding credit.

Credit scores have so many myths surrounding them. So many people believe that a married couple only has one score that they share and this is certainly not the case in any circumstances. Some people believe that an individual only has one score and this is also a false belief. It should come as no surprise that no one really knows what hurts or what helps their credit score. Some people accidentally damage their credit score which increases loan payments or even leads to denials for loans. These are some things that could unknowingly damage your credit score.

Damaging Your Credit Score

- Avoiding the use of credit completely and totally

A life free from debt is an awesome idea…in theory anyway. What this actually does it makes it more difficult for you to acquire a loan when you need to do so. This is because the lenders want someone who has some experience managing their debt and that you can make your payments on time and consistently. They want to determine this before they decide whether it is a good idea on their part to offer you credit.

- Comparison shopping.

Shopping around for the best price is also a good move, but again…only in theory. What it actually does is damages your credit score. Every time you call a lender and have them issue a quote for you, they check your credit score with each of the credit bureaus. That can make it appear as if you are trying to take on debt in large proportions which is a concern to most lenders. This is not necessarily a large impact and it does not damage your credit score tremendously, but it will hurt those who have a history with limited credit due to lack of experience that would typically balance out the impact of having the credit checked in the first place.

- Closing accounts

You may want to close out an account after you pay off credit card debt! Don’t do it. This move actually damages your credit score because a lender wants someone who has had accounts in good standing for long periods of time. Even if you have had the account for a long time, try to hold onto it anyway as it will only reflect better and better on your credit as time goes on.

- Decreasing the limit of your credit

Especially if you have a card that you share with someone else, especially a college student or maybe a spouse, you may consider lowering your credit limit so as to not rack up a huge debt. You appear more worthy of credit when you use less of the overall total that you have available.

-Opening an account at a retailer in order to acquire a discount

This might seem like the logical route to take so that you can get that certain percentage off on your current purchase, but this only serves to damage your credit score. Points are taken off every time they make an inquiry as to your credit score and opening a new account also raises a red flag that says you are trying to take too much debt upon yourself which makes lenders wary of dealing with you.

- Keeping a credit balance month after month

Paying anything that’s not the full amount or only making a minimum payment on an account simply leads to more fees and more interest along with incurring more debt overall. Some individuals keep a balance on purpose because they believe it shows they know how to maintain and manage their credit accounts. This looks to lenders like the individual has taken on too much credit debt already which may end in a higher interest rate on the account. In order to keep this from damaging your credit score, try to pay off your balance whenever you can and the sooner the better. This also will save interest and money for you short term.

It is really no surprise that credit reports are so confusing when you take all these misconceptions into account. Financial experts say that you should check your credit score once each and every year. This can be done for free at AnnualCreditReport.com. In this way you can make sure there are no mistakes on your credit report.

If you really want to boost your credit score, the best thing that you can do is make sure you are making your payments on time each and every month. This is the most sure fire way to make your way to having a stronger credit score, despite the companies that promise they can quickly increase your score right before you try for a loan.

Instead, you could pay your bills on time and this would lead to a better score overall.