More people now than ever have high credit scores to give them financial freedom. If you’ve been working diligently to repair your credit score, the last thing you want is to make a mistake that would stop your journey.
Do you know which mistakes to avoid when repairing credit scores? Keep reading to learn which pitfalls you might be doing.
1. Don’t Close Accounts
When we go to get a loan for a home or car, they always look at the credit score. If a bad credit score is a reason for denial, people tend to have knee-jerk reactions.
One of these reactions includes closing down credit card accounts. Many people believe closing the accounts will stop their impulsive spending and improve their credit score.
Unfortunately, this action can hurt your credit score.
Credit scores take into account the length and track record of your existing lines of credit. This includes credit card accounts. The longer you have an account, the better your score will be.
If you have to delete an account, pick one that you opened most recently. It might be a credit card you opened at your favorite store.
2. Don’t Go Further Into Debt
When you pay down debt and improve your credit score, we often look to make the purchases we couldn’t before. For some, this is the goal and there isn’t further action needed.
But what if you need to make another big purchase? What if you want to take a loan out for a car or home improvement?
After working hard to get your credit score up, don’t immediately return to old or poor habits. Keep practicing the fiscal responsibility that helped you in the first place.
If your credit score dips again, it could be even longer until you can make the purchases you want. Don’t handcuff yourself to a low credit score by driving yourself further into debt.
For people who really need help regardless of credit score, consider the best loans in your province.
3. Don’t Increase Your Spending Limits
While you don’t want to close any credit card accounts, you also don’t want to increase the spending limits.
Not only do higher spending limits invite impulsive or unnecessary spending, but they also hurt your chances of repairing credit scores. Credit reporting bureaus look for a person to have low utilization of their revolving credit.
The less you use your card, the better.
There are situations where the bank or company increases spending limits without a request. These increases are usually automatic. You can call and speak with a representative about halting all spending increases.
Make Repairing Credit Scores Easier
Repairing credit scores doesn’t have to be a constant struggle. Follow these steps to make the journey easier and more manageable.
Avoid these mistakes and get back to a financially safe place.
The business and investment world doesn’t have to be a complicated place. Keep reading more articles so you can have a better understanding of your finances.