Wrong Ways to Increase Your Credit Score

A bad credit rating could cause you to lose decent deals on loans, credit cards, and insurance. But if you’re getting behind on payments lately or for the past year, then expect this to be the result.

If you want to get back on track, you should start doing things that can increase your potential as a debtor. However, whatever means you decide on doing, avoid the following:

Lowering Your Credit Limit

Bad credit often results from mindless usage of credit cards. It causes large debt and eventually leads to late payments. So it makes sense that you want to lower your credit limit so you can control your charging.

But this can actually do worse for your credit score than good. An instant plummet of your credit limit will automatically enlarge your remaining balance thus making you look more like a bad credit card user.

If you want a lower credit limit, pay off your balance first before asking creditors to slice off some of it.

Don’t Make Late Payments

Even if you have managed to increase your score, say to 700, but missed one payment again, you’re bound to fall off 100 points below. Late payments are likely to immensely impact good scores than bad ones. So if you have a terrible credit rating, you won’t feel the loss that much. But to continue going upward with your score, maintain on time payments onwards.

Debt Consolidation

Yes, it is easier to pay debt if it’s in a single payment per month. Not to mention debt consolidation may offer lower interest rate which will tremendously help you save money. In terms of paying off debt, this is good; but not with upping your credit score.

Despite the fact that you only have now one source of credit card debt, your balance on the other hand is now near the limit. And that will what give you a bad score. So you’d do better with small balances in different credit cards.

Opening New Accounts

Getting a fresh new start with a new credit card won’t help your credit score either. Each time you open one, your score decreases. Credit providers will deem you to be a credit risk plus it simply doesn’t feel right when you open new accounts when you have plenty of cards already. Also, each time you leave a card dormant for months, your score decreases as well.

There are many ways to increase your credit score. Just be sure to skip these ones.