Whether you’re buying a car, applying for a loan, or putting in an offer on a new home, one number can be important in any major transaction: your credit score. Unfortunately, even people with a decent credit score in their personal finances can have trouble getting their credit score up and staying there.
“A credit score is a mathematically derived value that lenders use to assess a person’s risk when evaluating a new loan application,” he explained. Jeffrey Stouffer, a certified financial advisor and financial expert with JustAnswer. “However, the rate may be influenced by other factors that are not readily apparent.”
Want to get your number in the right place? Read on to discover seven hidden things that can affect your credit score, say financial experts.
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Pay off your credit card soon
Those who managed to get out from under the mountain of debt know that finally sending the last payment on the credit card can be incredibly liberating. In many cases, it may feel appropriate to cut ties with the company altogether. However, experts warn that you may want to wait a little longer before reaching for plastic scissors.
“Paying off your credit card debt is a big step that’s worth celebrating. But even though you may be tempted to close the account after it’s paid off to avoid adding to the card balance, don’t,” experts on the finance. Andrea Woroch say Best life.
“The amount of time you’ve had debt—also known as your credit history—affects your credit score. So you’ll want to open an old account. Add recurring charges and set it up to pay in full each month. to keep it active,” he advised.
Paying your bill on the wrong date
It’s true that paying your bills regularly and keeping your expenses in check can help lower your credit score. But according to experts, when you do this, your paychecks and overall debt levels may also drop.
“You can also significantly increase your points by making sure your balance is low — even $0 — when your credit card statement closes each month,” he says. Robert Farrington, founder of The College Investor. “For example, if your statement closes on the 15th of each month, make a full payment on the 10th. That way, when your balance comes out, it will show $0 used that – which can increase your score.”
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Not keeping credit card balances low
Everyone knows that using a credit card is dangerous when you can’t pay your bills. But even if you keep your purchases, your overall balance may still run a little below the maximum — and damage your score in the process.
“The rating is based on the type of credit,” Stouffer explains. “Revolving credit accounts have more impact because this type of account will change all the time. Credit cards can be maxed out a lot, and the score can go down and improve as the balance goes down. Usually, less than 30 percent” the existing debt. is the upper limit that can be accepted. Moreover, the number is decreasing.”
Don’t have a guarantee
Deciding to buy a home can be one of the biggest financial decisions a person makes in their life. Of course, having good grades is essential for the process. As it turns out, experts say that getting a loan can increase your credit score in the long run.
“A term loan shows how to make payments and reduce your debt balance,” says Stoffer. “The lack of credit will keep the score because it means the lack of a permanent basis in the housing. A person can have a clear credit history that includes many credit cards, loans car and payday loans. Some accounts may be active, some may be paid in full, and there are no late payments. But not having a loan will hinder this person’s credit score. this will not reach the highest score for these reasons.”
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Checking your credit score frequently
Probably one of the most frustrating parts of working hard to maintain your credit score is that every time a lender reviews it, it can affect your score. But experts say that staying on top of how others view your grades can be one way to keep them top-notch.
“When you apply for a loan, lenders often do an inquiry into your credit history. This is called a ‘hard inquiry,’ and it can have a negative impact on your credit score,” he said. Tommy Gallagher, former investment banker and founder of Top Mobile Banks. “However, there are also ‘soft inquiries’, which do not affect your credit score and are usually made by lenders for commercial purposes. Acceptance.”
Gallagher notes that most personal credit score monitors use soft questions and can be an easy way to track down unexpected hard checks that can come quickly. And while you may not be able to avoid applying for multiple types of financing due to a big move or major life change, you can avoid applying for too many credit cards over time. short.
Victim of theft or fraud
Today, everyone knows that their personal information is a piece of data that is in the hands of someone who will use it in a bad way. But even if you can’t control identity theft, you can keep your credit score higher if you regularly monitor for such infractions — which is a helpful tip that says some experts but the general practice is not enough.
“If your personal information is compromised and used to open a credit account in your name, it can have a significant impact on your credit score,” Gallagher said. “It’s important to regularly check your credit report and be vigilant about protecting your personal information to avoid this type of problem.”
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Forget about raising car payments
While technology has made some aspects of everyday life easier, it has made it a more stressful place in other ways. Sifting through the daily notifications to pick out the most important reminders and alerts in a sea of marketing information can be difficult. That’s why even if you think you’re organized about paying your bills each month, you could be damaging your credit score if you don’t automate the process.
“It’s simple: Make sure you never pay,” Farrington said. “You can help ensure this by setting up auto-debit, so your payments are always on time. Also remember that utilities such as cell phone bills, electricity, water, and rent payments can have a negative impact on your credit if you just don’t find one payment.”
Best Life offers the latest financial news from top experts and the latest news and research, but its content is not intended as a substitute for professional guidance. When it comes to your spending, saving and spending, talk to your financial advisor directly.