ProConnect

5 Unexpected Ways We Damage Our Credit

By

5 Unexpected Ways We Damage Our Credit
Figure out if your credit can be going down the drain through one of these ways.

by Jeff Hindenach of NextAdvisor.com, for GalTime.com

 

More from YourTango: Want To Improve Your Marriage? Get Organized With Weekly Meetings

How to increase your credit score

You have credit cards. You pay all your bills on time. You never go over your credit limit. You seemingly follow all the rules of responsible credit usage and yet you’re having trouble moving your credit score into that illustrious “excellent” category. What are you doing wrong?

 

Damaging your credit score is easier than you might think, particularly with all the misconceptions about credit floating around. The main problem is many of us don't know how our credit score is calculated and therefore have no idea what we’re doing wrong. Paying your bills on time is only a fraction of what makes up your credit score.

Before we can raise our credit score, we must first be aware of the following 5 things that can hurt our credit.

More from YourTango: How Often Should You Bathe Your Baby?

 

1. We avoid credit. Many people think that credit cards equal debt. Debt is bad, so credit cards must be bad too, right? Wrong. Having little or no credit can be detrimental to your credit score. The whole point of a credit score is to show that you know how to handle credit. If you don’t have credit history, lenders have no way of knowing if you can deal with debt. Debt is bad, but credit cards are not when used responsibly. Limiting your credit card spending to a small percentage of your credit limit and paying your cards off each month will help keep your credit score strong.

RELATED How to Find the Best Credit Card for You

 

2. We close out credit cards or lower our credit limit. If you think lowering your credit limit or canceling that extra credit card is a good idea, think twice. While these actions may help ease the temptation to spend, they can also hurt your credit score. Here's how: One of the main factors of your credit score is your "credit utilization ratio," which measures your limit-to-balance ratio on your credit cards. As the ratio goes up, your credit score is likely to be negatively affected. Say your total credit limit is $5,000 and your total balance is $500. Your credit utilization ratio would be 10 percent. If you cut your credit limit to $2,500, but your balance remains $500, your ratio is now 20 percent. A higher credit utilization ratio is considered a negative factor because it means that you are using more of your credit limit.

Share this with someone you love (or even like a lot)!

Let's make it
FB official
Recent Expert Posts
Relationship Advice For Women: 5 Things That Turn Men Off

How To Lose A Guy In Ten Minutes: 5 Major Turn-Offs

If you want to impress a new guy, avoid these major turn-offs.

Sex Education: How Sex Ed Will Lower Birth Rates

Sex Education In South Carolina: How It Changed Their City

It's important that you're honest with your children.

Brain

Are We Wrong about Who We Are?

When Barbara Garcia's home was flattened by this month's tornado in Moore, Oklahoma, ...

Ask The Experts

Have a dating or relationship question?
Visit Ask YourTango and let our experts and community answer.

Resources
How to find the right pro for you
10 Reasons Mental Health Pros Should Join YourTango Experts

10 Reasons Mental Health Pros Should Join YourTango Experts

YourTango Experts can help your business go from good to great.

10 Steps To Improve Your Coaching Business

Take your coaching business from mediocre to great in no time…

Frequently Asked Questions About YourTango Experts

Thinking of joining? Here's all the facts you need to know to make the most of your membership.

Getting Your Guy To Join You In A Therapy Or Coaching Session

So how can your get your strong, self-reliant, superman to talk to an Expert with you?

Therapist/Counselors: Who We Are & What We Do

What exactly does a therapist/counselor do and can they really help?

See more resources>
HOT STUFF!
FROM OUR PARTNERS