Back to the Basics: CC Style, Part 3

Mature couple making online purchase

Well hello again! Welcome to your third installment of Back To the Basics: Credit Style. I hope you’re learning lots about the three little numbers that rule the financial world! I think today’s topic is really going to peek your interest.

We help members with credit related questions every single day at Linn Area Credit Union. One of the most commonly asked questions is, “What hurts my credit score?”

Well here it is, folks! A nice little list of things people do that cause their credit score to feel the burn:

  • The easiest to prevent and most common mistake is missing payments. It doesn’t matter what the dollar amount is, if you miss a payment, it’s going to burn. It can take up to 24 months to restore credit with just one late payment showing up on your credit report.
  • Closing unused accounts that are in good standing. This one is a little confusing. You see, closing an account in good standing actually diminishes the number of good trade lines on your credit report.  And it could shorten the length of time of your oldest credit history.
  • Applying for a lot of credit cards and store cards in a short period of time.
  • Having an account sent to collections or (eek) charged off.
  • Closing a credit card that still has a balance.

Who knew credit scores were so needy and sensitive? Just like that person you used to date in high school…

Well here’s some GOOD news! There are some things that DO NOT affect your score:

  • Debt ratio (how much debt you owe compared to your income)
  • Income
  • Length of residence
  • Length of employment

Don’t be fooled, though! These items do factor in when applying for things such as loans.

If you’re credit score isn’t quite where you want it to be, fear not! Next time we are going to share with you TEN WAYS to improve your credit score – things that you can start doing RIGHT AWAY! Holy cow! I can hardly wait!