Hey folks, I’m Doc Compton, your go-to guy for all things consumer credit. Today, we’re going over the top five credit killers that wreck most people’s credit scores.
Ignorance of Your Credit Report
First on the list is simple ignorance. It’s amazing how many people hurt their credit just because they don’t know what’s on their credit reaport. You must get a copy of your credit report, read it, and understand it. Look for glaring errors. If you find any, fix them yourself or hire a professional. Ignorance is not bliss when it comes to your credit score.
Bad Advice from Non-Professionals
The second credit killer is taking advice from the wrong sources. It’s common for people to listen to unsolicited advice from relatives or friends who have no real expertise in credit management. For example, someone might tell you to pay down all your collections, thinking it will boost your credit score. Don’t listen to advice from people who don’t know what they’re talking about. Make sure you consult a true professional in the industry.
Having Too Little Credit
The third credit killer is having too little credit. This often affects first-time homebuyers or people recovering from financial setbacks like bankruptcy or medical issues. If you don’t have enough credit history, it will impact your credit score negatively. Lenders like to see a variety of credit accounts to gauge how you handle different types of credit.
Having Too Much Credit
On the flip side, having too much credit is just as damaging. You don’t want to go and get multiple car loans or several new credit cards in a short period. This will look terrible to potential lenders and will tank your credit score. Be mindful of how much credit you take on and space out your credit applications.
Excessive Debt
Finally, the fifth credit killer is having too much debt. It’s not just the number of accounts you have, but also the dollar amounts you’re carrying. Racking up $20,000 in credit card debt or financing two expensive cars can make it seem like you’re living off your credit. This can absolutely destroy your credit score faster than anything else.
Wrap-up
Safeguarding your credit score requires vigilance and informed decisions. Ignorance of your credit report, bad advice from non-professionals, having too little or too much credit, and excessive debt are all significant threats. By staying informed, seeking professional advice, maintaining a balanced credit history, and managing debt responsibly, you can protect and improve your credit score.
Remember, your credit score is a crucial part of your financial health, and taking proactive steps can make a substantial difference in your financial future.
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