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Real Estate Realities Newsletter
February 2023
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Biggest Credit Score Mistakes

We’re all facing a little financial uncertainty these days, with skyrocketing household debt, rampant inflation, and a volatile economy. As interest rates rise and a recession looms, your credit score is more important than ever. In fact, managing your credit and debt to ensure a great FICO Score will save you huge amounts of money every year.

However, the opposite is true, too, as making these common mistakes can really sink your credit score and thwart your family’s finances.

Here are the 7 biggest credit score mistakes to avoid (and how to fix them!):

  1. Paying late.

So, you were super busy last week, and it slipped your mind to send in that mortgage/credit card/car loan payment on time. It only arrived a couple of days late and you paid the full payment, so it shouldn’t be a big deal, right?

Wrong. By paying past the due date, you may have caused catastrophic damage to your credit score, and that damage may haunt you for a full seven years.

In fact, paying on time makes up 35% of your FICO Score – the most important single factor. Not paying all of your debts and bills on time is the single biggest credit mistake we see people making, again and again.

The fix:
Set up an auto payment on your credit cards and debts online and set a reminder on your phone or calendar to make sure they went out on time.

And while you’re supposed to pay by your account holder’s due date, they likely don’t report a late payment to the credit bureaus for up to 30 days. So, if you did make a mistake and missed a payment, call them up immediately to plead your case, pay up-to-date, and request that they don’t report to the credit bureaus.

  1. Maxing out credit cards.

Spending up to the limit on your credit cards can also have a seriously detrimental effect on your credit score (not to mention on your finances). When you look at how your credit score is calculated, something called Credit Utilization Ratio is the second most important factor, accounting for 30% of your scoring.

Utilization for short, it simply indicates your current debt balance compared to the total available credit – what you’ve spent versus your total. To maintain a good credit score, this utilization percentage should be around 30% or less (you only owe $3,000 on a credit card that has a $10,000 balance). But for those consumers with great credit scores, research shows they keep their balances below 10% of the total credit available – a 10% utilization ratio.

Blowing past 10% and 30% on the way to a 100% utilization ratio when you max out your credit cards will only hurt your score since Credit Utilization accounts for 30% of your FICO Score.

The fix:
Keep your credit card balances below 30% or 10%, ideally. But if you can’t pay down your debt right now, consider asking for a credit line increase BEFORE you max out your card – it will improve your utilization rate so your score shouldn’t be impacted as much once you spend up your card (which won’t be maxed out anymore).

  1. Applying for new credit too frequently.

Do you regularly say “yes” to credit card offers and “special” deals that are sent to you? Applying for all of those new cards or accounts can have a negative impact on your credit score. According to FICO, new credit (and applying for every card under the sun) makes up 10% of your FICO Score.

Research shows that opening several credit accounts in a short amount of time represents a greater risk—especially for people who don’t have a long credit history.

The fix:
If you NEED a new credit card, auto loan, mortgage, etc., it’s best to do all of your research beforehand, then apply selectively and within a 30 day span or so. When lumped together because you’re “shopping around,” these credit pulls won’t negatively affect your credit score.

  1. Making only minimum payments.

Once you charge up a pretty sizable credit card balance, the last thing you want to do is pay it monthly using only the minimum payment. Making only minimum payments may technically keep your account in good standing, but it will be very hard, time-consuming, and incredibly expensive to actually pay off your debt that way.

When you make minimum payments, you’re only chipping away at 2%, 4%, or a small flat fee of your total balance. But at the same time, your interest is still accruing, so most people barely make a dent in their total balance with the minimum payments.

Not only will it drain your bank account but it can negatively impact your credit score in direct and indirect ways, so don’t pay just the minimums!

The Fix:
Always pay more than the minimum, even if it’s $50, $100 extra, or whatever you can afford. Make sure you use credit cards with the lowest interest rates, so your balance won’t keep accruing huge interest charges as you try to pay it off.

  1. Closing old accounts.

Many people think it’s good credit management to pay off an old credit card or account to zero and then close it. However, what you effectively just did is erase an established record of on-time payments from your credit report, a huge mistake that will sink your score. In fact, credit history accounts for 15% of your credit score, a huge mistake!

The fix:
Carefully review your credit report before paying off any account to zero and closing it. You’ll probably want to leave it open with a minuscule balance and keep paying it every month, which will boost your credit score and won’t hurt you financially.  

  1. Saying “yes” to retail cards, buy-now-pay-later, and cash advances.

The type of debts and credit you take out matter as well, which many people don’t realize. So, a balance on an Amex or credible credit card company will hurt your credit far less than the same balance on retail credit lines, buy-now-pay-later services, furniture installment plans, etc. I’ll throw in cash advances, paycheck services, and other shady loan services to this group of not-so-desirable credit accounts you want to avoid.

The fix:
Manage your credit and debt at home on a regular basis where you can make cautious, well-research decisions – not at the cash register of a retail store when they offer you a little discount for taking out their credit card. 

  1. Not calling Blue Water Credit for credit score help!

With credit card and other debt sharply on the rise, inflation hurting us at every turn, and the economy on shaky ground, your credit score matters more than ever once again. Don’t leave it to chance – make sure your credit score is maximized with a score as high as possible by contacting Blue Water Credit. We’re the nation’s leader in effective, legal, and ethical credit repair, helping thousands of happy clients improve their scores and save money for well over a decade.

If you’re applying for a mortgage soon, shopping for a car and need a loan, looking at student loans, or even looking at your dream job that pulls credit, Blue Water Credit is your best resource!

The fix:
You guessed it – simply give Blue Water Credit a call!

Or you can email us or message us on social media to book your no-risk credit assessment.

Norm SchrieverCourtesy Blue Water Credit



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