How To Keep Your Credit Score Stable or How To Not Mess Things Up
So, you’ve found your dream home, you’ve applied for a mortgage…what do I do to make sure my credit score is stable? What factors could adversely impact it? How do I make sure it does not decrease at all? Should I just stop using my credit cards?
Go over these guidelines to make sure you don’t adversely impact your score and lost that dream!
DON’T APPLY FOR NEW CREDIT OF ANY KIND
New credit is OFF LIMITS, including buying new cars or those credit card invitations you get the mail. Shred them and throw them out. Every time you have your credit pulled, you could lose up to 2 – 50 points.
DON’T PAY OFF COLLECTIONS OR CHARGE OFFS
Seems counter-intuitive, doesn’t it? But paying collections will decrease the credit score immediately because the date of last activity on the negative comment will be recent. If you want to pay off old accounts, do it through escrow, and make sure that you 1) validate that the debt is yours, and 2) that the creditor agrees to give you a letter of deletion.
DON’T CLOSE CREDIT CARD ACCOUNTS
Closing credit cards makes your debt ratio appear higher and may adversely impact your length of credit history. If you have to close a card account, do it after closing, and make sure it a recent account, not an older one.
DON’T MAX OUT OR OVER CHARGE ON YOUR CREDIT ACCOUNTS
The fastest way to bring your score down immediately about 50 – 100 points is to max out those cards. Try to keep your credit card balance below 30% of the available limit at all times during this time.
DON’T CONSOLIDATE-LEAVE THEM ALONE
Have you been considering taking advantage of those offers to transfer balances and get a lower interest rate? It seems like the smart thing to do, pay less interest and show only a few cards. But in reality, when you put all your outstanding debt onto one card, it appears like you’ve maxed out that card, and you credit score will suffer. Again, wait until after closing.
DON’T DO ANYTHING THAT WILL CAUSE A RED FLAG ON THE SYSTEM
But I have no idea what causes a red flag? Adding a new account, co-signing a loan, changing your name, changing your address. The less activity of any kind on your reports, the better.
DON’T BE LATE ON ANY PAYMENTS
Stay current on your mortgage, car loans, or any installment debt. Stay current on your cards. One 30 day late payment on your report, and you could lose from 30 – 70 points.
DO JOIN A CREDIT WATCH PROGRAM
By joining a credit watch program, you can check your own reports and correct any issues before closing. If you pull your own credit reports, you do not lose any points.
DO CONTINUE TO USE YOUR CREDIT AS NORMAL
If you regularly use your credit card but then pay off the balance each month, continue to do so. If you keep a very low balance and charge, continue that practice, making sure your balance does not go above what it was when you applied for your loan. If it appears that you are changing your pattern of spending, it could raise a red flag, and your score could go down.
Here is a reference page you can use to download and keep. Just right click and choose Save The Image.