Do you know how important your credit score really is? It's entirely too important for you to not know anything about what your score is or how to improve it. A good credit history determines if you can get that new car through an approved loan or maybe buy a new house because you were approved for a mortgage. A minor misstep or simple mistake such as a late payment can turn around and torment you for years to come.
The problem is many people don't realize there are so many different things that can affect their score. Instances such as an unpaid credit card bill can wind up in a collections account leading to a drop in their credit score faster than they can imagine. Did you know that other circumstances can drop your score if you are not careful? Unpaid parking tickets or even an unpaid traffic fine could lead to a negative mark. Here are a few other times where you need to be careful:
Don't pay a bill at all - One of the worst things you can do to your credit score is ignoring your credit card bills completely. Even a late payment is better than no payment. I try to think of paying off credit cards this way. For every month you don't make a payment, it is more monthly bills you need to budget for. Charging off an account - Another little trick some people try is charging off their accounts in lieu of an actual credit card payment. Let me just say that this is a killer to your credit score and avoid this at all costs no matter how simple it seems. Having a loan go into default - A loan default works in the same manner as a credit card charge-off. It shows to future lenders that you are a risk since you never fulfilled your end of a previous loan contract. Being sent to collections - You know those annoying phone call you get at all times of the day looking to speak to you about your debt? Those are third-party debt collectors hired by the credit card companies looking to collect payments from you. The last thing you want is your account to reflect you were sent to collections. It shows they gave up trying to get payment from you and hired someone to do it for them. Filing for bankruptcy - Nothing completely obliterates your credit score than filing for bankruptcy. I know sometimes there is no other option, but before you choose this route, I recommend trying any other alternative that you can such as consumer credit counseling. Home foreclosure - Home foreclosures are what happens to people when they can't make their mortgage payments. Remember how I said that late payments hurt your credit score? This does the same thing but often times are much worse because it makes it extremely difficult to get approved for any future mortgage loans. Credit cards maxed out - One of the least ideal scenarios for your credit score is to max out all your credit cards. This, along with any cards that are over the spending limit, can make your utilization 100% and that reflects poorly to your score.
