Most Americans understand that filing for bankruptcy or letting their house go into foreclosure is going to have a negative impact on their credit score. But what many fail to realize is that making much smaller mistakes on a regular basis can take just as much of a toll. If you want to manage your credit and improve your credit score, financial experts like Credit Guard often agree that there are three common credit management mistakes to avoid.
1. Opening Too Many Accounts: Do you have multiple companies sending you attractive credit card offers every day? Do you see credit commercials and dream about all the things you could buy with plastic? There’s nothing wrong with having a credit card, but opening too many accounts can look bad on your credit history, especially if you open several in the same year. Stick with your available credit until you’re sure you can open another account without implicating your score. The key to good credit management is being smart with your credit cards.
2. Closing Too Many Accounts: Are you thinking about closing that credit card account you haven’t used since college? You may want to reconsider. The more available credit you have, the better your credit score and the more credit management skills you’ll learn. It improves your credit-to-debt ratio, which is perhaps the most important aspect of your score. A consumer credit counseling program can help you determine the right balance between having too many credit cards open or closing too many of your existing accounts.
3. Failing to Review Your Credit: Believe it or not, most people have no idea what their credit report looks like. Each year, you are entitled to view what your credit score looks like from one of the three major reporting bureaus. If you spend half an hour each year looking over your credit report, not only will you be able to catch mistakes and dispute the inaccuracies, but you’ll also be able to know what you need to do to improve your credit management skills on the upcoming year. A quick look at your credit score can prove to pay off in dividends.