Common Credit Mistakes

1. Paying off all your debts.
2. Closing positive established lines of credit.
3. Paying off negative accounts and not requesting to have them removed. 
4. Not having loans or credit cards on your report. 

Paying off all your debts.

• Part of how your credit score is broken down is having a “healthy mix” of credit which includes auto, mortgage, and credit card debt.  Paying one of these off throws the balance off and can negatively affect your score. Paying off all your debts may sound like a wonderful idea and it is as long as you pay off the right debts and don’t close long standing accounts.   Your credit score will always be higher, if you do not have any late payments on a credit card, even if you still own them money.

Closing Positive credit card accounts

• NEVER close accounts that are paid off, and you are in good standing, these accounts can only be a good thing. The longer you have an account open, and show that you are paying your bill each month, the better that will reflect on your score. Part of the criteria a lender will use to evaluate your credit worthiness, is how long you have had a line of credit open. 

Paying off negative accounts and not requesting to have them removed.  

• This is horrible, you just paid off a negative account and it is not going to come off your report, even if the balance is $0 the credit agencies will not remove your old negative accounts. Do your self a favor and send them a removal request letter, this is very important. 

Not having loans or credit cards on your report.  .    

• Now, this is only good if you live on an Island that has money trees blooming every spring, but if you don’t this is a major problem.   Creditors want to see how you handle debt and if you can’t show that, your baby smooth blemish free credit report is just as good as someone’s that is riddled with collections, charge offs, and bankruptcies.