Things That Negatively Affect Your Credit Score Ratings

Many responsible consumers today are more aware of their credit score and check it on a regular basis, even if only to check for instances of identity theft. It seems that people are always looking for ways to improve their credit in hopes of obtaining the perfect credit score, but they do not consider the things they may be doing that actually cause more damage to their score.

Following are some examples of actions you might be considering, and why you should think again.

Canceling a credit card can actually lower your credit score, not to mention affect your interest rate if you cancel it before paying off the balance. It is always a good idea to keep the oldest credit card you have open, because it shows your long-term credit history. Keep your oldest and best accounts open, and close out newer accounts gradually. It is probably not a good idea to close them out if you plan to run your credit anytime soon.

Paying off any collections that show up on your credit report will adversely affect your score, because it will update the delinquency already on record, instead of leaving it at the original date (which could be years ago). It will then become a fresh collection. It is always better to pay down than to pay off.

Paying off credit cards each month may actually lower your score. It is better practice to let a little roll over each month, even if you only keep a few bucks as the balance. A low balance on your account will still shows that the card is active and that will figure into your credit score.

One more thing that many people have not thought of is their current credit cards which may have been affected by recent regulations, as well as their home equity lines of credit that have been frozen due to declining property values (not because of payment issues). This may have unknowingly affected your credit score ratings if the balance is high and the credit amount available has been lowered. You may have fallen into the category of accounts with higher than 50% of the credit limit. If so, then these will be the accounts that you will want to pay down first.