In this article, we will disclose the four to stop hurting your credit and get back on track; especially after the Covid pandemic. For many of us to survive we had to dip into our savings; apply for credit and seek loans, thus paying astronomical rates.
Rebuilding your credit score could be a challenge to most consumers, but with the proper education combine with action your goals could be achieved. Once you get your score to the number you want, you want to protect it by not making careless financial mistakes.
The 4 ways we are going to protect your credit are:
Inquiries are a record of potential creditors requesting your credit history. When you seek funding for a car loan, home mortgage, or department store credit card an inquiry will be made and remain on your credit report whether you are approved or not.
The negative impact of credit inquiries is that inquiry records higher than 5 will drop your score and a potential creditor will not extend credit if you are actively seeking credit. In the situation of a car loan or mortgage, banks don’t like to see that you have applied for credit all around the town.
If you are applying for a car loan or a mortgage within 45 days, it will count as one inquiry. Soft inquires won’t hurt your score, but hard ones will. Be careful when you search online comparing car quotes because some credit bureaus may count the inquiries against you.
Don’t provide false information to improve your score for the following reasons: First, banks can check your correct score with no problem. And second, it’s fraud if you misrepresent information on a credit card application.
Lack of budgeting is a major factor in why people have a bad score. Spend time formulating a weekly and monthly budget. It will allow you to spend less than you earn and put extra money away toward paying off your debt.
Try to save each month for emergencies. By saving, you will avoid over-extending your credit cards, which can bring your score down. Start out with saving 5% of your income every month and then go to 10%. You can have your bank take the money out every month and have it transferred to your savings.
Emergencies such as losing your job, a medical crisis, or a death in the family can often be an unexpected financial strain, if you’re unprepared. You must have money in place to maintain your bills, or your three digit number could take a hit because all of your available money will go toward your emergency.
Get life insurance, health insurance, disability insurance, and car insurance. If you have an emergency in any of these areas and you don’t have proper coverage, you can find yourself in serious debt and with a damaged your three digit number.
Closing old credit cards will not always hurt your credit score, however here are 2 ways that it will.
First, when you close an old card, it will reduce the over length of your credit history which will in return lower your credit score.
Second, closure will lower the amount of high credit you have between all of your credit accounts.
Now that you are aware of the four things that can lower your three digit number, go out there and take action to prevent your three digit number from taking a hit. Until next time.