We should be extra vigilant with our credit file. The system of credit we live under is eager to suck people in but shows no remorse when we fall off track. We have got to be wise and ensure we are making credit work for us, not letting it beat us.
Opening too many new credit accounts can be harmful.
If your credit’s in the gutter, you won’t be doing yourself any favors by making rash moves. In fact, you may worsen your situation. When trying to repair your credit, it’s key to remember the basics: Check your credit reports for accuracy, find out why your score is so low and come up with a plan for improving it.
Yes, it’s really that simple, but all too often people do the following.
Not checking credit reports
You can’t fix what you don’t know is hurting you, and that goes for your credit. To learn about your specific credit score killers, get in the habit of regularly checking your reports — especially since you can pull a free report from each of the three credit reporting bureaus once a year at AnnualCreditReport.com.
Not disputing credit errors
One in five consumers have an error on at least one of their credit reports, according to a 2012 study by the Federal Trade Commission, so you don’t want to quick scan your scores and simply take those numbers at face-value. Instead, review your reports thoroughly for errors. And, after doing so, be sure to put any issues you see in writing and send a letter via certified mail to the relevant credit bureau. (You can go here to learn more about disputing errors on your credit report.)
Closing a credit card
It sounds counterintuitive — shouldn’t closing an credit card account that’s gotten you into trouble in the past help clean up your score? — but it isn’t. Closing a credit card could lower your score by trimming the length of your credit history and reducing your available credit. It’s a good idea to keep the amount of debt you owe below at least 30% and ideally 10% of your total credit for best credit score results, so if closing a card will put you well over that threshold…