Unique Ways to Manage Your Credit

To many, making payments on time and staying below 30% of your balance is all you need to keep a high credit score. Although these are major components that are used in the formulas to determine your credit score, they are not the only ones.

In addition, there are certain metrics that could affect your credit score that you might not normally consider. Let’s take a look at them.

Closing Unused Accounts

One would think that if you are not using a credit card or other loan, such as a line of credit, it would make sense to close it out. Reason being that it would keep your credit file more organized and up to date.

You may be surprised to learn that this is not the case. As a matter of fact, closing out accounts with zero balances may be detrimental to your credit report. Here’s why: One of the criteria of the credit report formula is a metric of how long you’ve had credit cards. The longer the better, but If you keep closing them out, they won’t reflect the actual longevity of your credit history and subsequently, if you would not gain points that you would if you didn’t close them out.

In addition, if you do need an account close, make sure you contact the credit card company. If the finance company closes you out, then you will again lose points.

Ignoring traffic tickets or being slow paying utilities

What if you have been accumulating those automated red light tickets and you think that there’s nothing wrong with delaying paying them? This would be the wrong attitude to take. Many towns and cities have gotten stronger on delinquency and if you don’t pay or go to court to fight it, you may receive a letter from your county giving you 10 days to pay or else. The ‘or else’ is very important, because if you ignore it, your next letter will be from a collection agency and your credit rating will suffer.

Worse yet, if you do accumulate a large amount of unpaid fines, you stand the risk of having your car towed.

Neglecting to Monitor Your Credit Report

Credit monitoring services do a good job, but that doesn’t mean you should rely totally on them and not stay on top of things yourself. With that said, make sure you have a copy of your credit report on a yearly basis, if not more often. You may be surprised the mistakes you will find.