Ways to Recklessly Drive Your Credit Score Down

It should go without saying that a high credit score is an attractive quality to have when visiting mortgage companies such as City Creek Mortgage. However, many people do not put enough effort to handle their finances well and in turn negatively affect their credit inadvertently.

To keep your credit score as high as possible before visiting your lender’s office, you should understand what you might be doing to pull it down. If you are guilty of the following things, you should shape up ASAP:

You Don’t Pay on Time

Your payment history is the most influential factor that can improve or stain your creditworthiness. You ought to fulfill your financial obligations on time. Several missed payments over the course of six months can raise doubts about your capacity to manage a mortgage.

Missed payments are bad, but they only pale in comparison to charge-offs, debt settlements, and bankruptcies. Fortunately, time heals all financial wounds, but you should avoid having negative credit information if you want to get a mortgage soon.

You Borrow Too Much

Man paying online with credit card

Ideally, your credit utilization rate should be 30% or less. In other words, you should only use 30% of the total amount that you can borrow to avoid seeming overly dependent on debt. However, this does not necessarily mean that having a $0 balance on all of your accounts is good. You still need to use your credit cards to earn brownie points; just do not max them out.

Buying new things with your credit card will increase your credit utilization. If your balances are high, your credit utilization or credit score will be affected. With that in mind, you should pay cash for purchases instead of placing them on your credit card. Doing so will lessen the impact on your credit score. Moreover, if you can cancel the purchase, you can use that money to decrease your credit card balance. Reducing your balances will help you increase your credit score.

You Close Old Accounts

The length of your credit history represents 15% of your credit score. In short, the age of your oldest account helps determine how creditworthy you are. Even if you do not use your old credit cards, it is generally wise to leave them open.

You Request for New Credit Often

Unlike soft inquiries, hard ones reduce your credit score. They occur whenever you want to apply for fresh credit. Opening new credit accounts in a short period creates the impression that you are having cashflow problems. This can paint a bad portrait of yourself to mortgage lenders.

A bad credit score can be both stressful and expensive. However, it is not the end. As unfortunate as the circumstance might seem, your bad credit will not last forever. In addition, you can do many things right now to start increasing your credit score.

In the end, you have to invest in yourself if you want a mortgage lender to invest in you. Making the right moves to increase your credit score can help you obtain not only a home loan but also a lower interest rate.

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