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Question: What are some common mistakes to avoid when trying to improve your credit score?
Answer: When it comes to improving your credit score, there are several common mistakes that you should avoid:
- Missing Payments: One of the biggest mistakes you can make is missing payments on your credit accounts. Payment history is a major factor in determining your credit score, so it’s important to make all payments on time.
- Maxing Out Credit Cards: Using up all of your available credit can negatively impact your credit score. It’s best to keep your credit card balances below 30% of your available credit limit.
- Closing Old Credit Accounts: Closing old credit accounts can actually hurt your credit score. Length of credit history is another important factor, so it’s beneficial to keep older accounts open, even if you’re not using them.
- Opening Too Many New Credit Accounts: Opening multiple new credit accounts within a short period of time can be seen as a red flag by lenders. It’s best to be selective and only open new accounts when necessary.
- Ignoring Credit Reports: It’s important to regularly check your credit reports for errors or discrepancies. Mistakes on your credit report can lower your credit score, so it’s crucial to address them as soon as possible.
- Not Paying Attention to Credit Utilization: Credit utilization refers to the amount of available credit you’re using. Keeping your credit utilization low can help improve your credit score, so it’s important to monitor and manage your credit card balances.
