Seven Bad Assumptions That Hurt Your Credit Score

Many people make an inappropriate assumptions about how to enhance credit rating and the right way to improve credit scores. Do not think that the assumptions of yours are correct.

Poor Assumption #1: Lower maximum card limits improves the credit score of mine.

Credit scoring programs don't penalize you for having higher credit limits. However, they actually do penalize you best payday loans for bad credit direct lenders ( www.tacomadailyindex.com - https://www.tacomadailyindex.com/blog/best-bad-credit-loans-2022-top-hig... ) having huge balance relative to your limits. A $2,000 balance on a card with a $2,500 limit significantly lowers your credit report. However, if you increase the limit to $10,000 on the same card, a greater credit score results because you look less "maxied out" on the credit cards of yours. Moving that balance to a more significant maximum restrict card may also improve your score.

Bad Assumption #2: Always paying the minimum is going to result in a good credit rating.

Of course not paying the minimum will adversely impact your credit rating. However, paying that minimum will not usually cause a quality score either. The key problem is keeping your reported exceptional balance - http://statigr.am/tag/exceptional%20balance low relative to the optimum credit limit. Keeping the balance of yours at less that ten % of the optimum limit is great. A balance more than 50 % of the maximum can dramatically reduce the credit score of yours.

Bad Assumption #3: Always spending by the due date will result in an excellent credit score.

Certainly paying late will reduce the credit score of yours, but it entails much more than timely payments to get a high credit rating. Why wait to buy a paper copy of a bill. Go on line three times a month, review the credit charges of yours, and also pull in on line payments. Thus you are not late. There's less chance of highly effective identity theft since you see the charges earlier, a lot more frequently, so you can take corrective action earlier.

But above all the reported balance to credit reporting agencies is reduced. What usually gets reported on the credit agencies is the balance on the paper bill. Reducing this particular balance by having to pay before the bill is produced will boost your debt ratio and your credit score.