Top Credit Mistakes to Avoid

When it comes to buying a home, the higher credit score the better. Here are 5 critical mistakes to avoid in regards to your credit.   

High Credit Card Balances

Having maxed out credit cards or high credit card balances can really affect your credit score. The goal is to have your debt be no more than 30% of your credit limit, if not lower. It is good to remember that your debts make up 30% of your entire credit score.

Bad Payment History

Late and missed payments can be extremely detrimental to your credit score, as your payment history makes up a whopping 35% of your credit score. Try making at least the minimum payment each month. If you go six months or more without making a payment, your creditor can sell your account to a collection agency, which can severely hurt your credit score.

Credit Score

Short and Irregular Credit History 

15% of your credit score comes from the length of your credit history, the longer your accounts have been open, the better. Even if you don’t use old credit cards anymore, don’t close those accounts, it will only hurt your score.

Not Having a Variety of Credit

Having multiple forms of credit shows that you are able to pay off various debts on time. Car and student loans including retail credit cards are an example of having a blend of credit.

High Volume of New Credit

Applying for and opening many low-limit credit lines all at once is a sign that you have trouble managing your credit. Opening new accounts of credit makes up 10% of your overall score and can decrease the length of your credit history, which can also lower your score.