There is more that can hurt your credit score than just making late payments, going over the limit, or receiving derogatory marks. To have good overall credit health, there are several common practices that you need to avoid. Doing these things can still hurt your credit, even if the results are not as obvious.
Pay By The Day
Paying your credit card balance off each month is the ideal thing to do. However, just because it’s paid in full does not mean that it will be reflected as such on your credit report. If you want your credit card balance to show up as $0 you will need to be strategic with your payments. Instead of paying by the due date, pay before the statement close date.
Freeze That Debt
The amount of credit that you use has a substantial effect on your credit score. It is known as your credit utilization. It is ideal to keep your credit utilization under 30%. If you’re already over 30%, try using payment strategies like the snowball method to get your credit usage down.
More Credit, More Problems
For some people, a solution to getting credit utilization down could be getting more credit. However, that is a very bad idea. Applications for credit show up as hard inquiries on your credit report. Having too many hard inquiries in a short period of time can negatively impact your score.
If It Ain’t Broke, Don’t Fix It
You probably have credit cards that you don’t use anymore. They’re tucked away in a drawer somewhere. If this is the case, do not close those accounts! Closing them will automatically lower your available credit, thus increasing your credit utilization. If you feel as though you might be tempted to use them later on, cut them up. Make sure there is no minimum usage requirement to keep the account open.
Less Is Not More
Paying the minimum balance on your credit card will keep you from having derogatory marks. However, it will also keep you in debt and have you paying unnecessary interest. If you can, pay the entire balance in full. If you’re not in a position to do that, pay as much as you can to eventually get the balance to $0. After that, keep your charges to a minimum so that you can afford to pay the entire statement balance every month.