5 Fatal Mistakes We All Make That Drive Down Our Credit Scores
Most people dont realize that they can drive down their credit scores even if they have a near-perfect record of paying their bills. The five classic mistakes you need to avoid are:
1. If you are applying for a mortgage, never pay off old collections, judgments or tax liens until the closing. (Ask your mortgage lender if you pay these debts at your closing.)
When you pay these debts off before applying for a mortgage, they are treated and scored as new and recent accounts with delinquent activity. This drives your credit scores down.
2. Closing credit card accounts initially lowers your scores. Again, this is due to your action showing up as new and recent credit activity. Any new or recent activity will have an initial detrimental effect on your scores.
Of course, after you close inactive or unnecessary accounts the scores will eventually come up because you will have less credit or potential credit risk. But it may take months for this to occur. Unfortunately most people close superfluous accounts right before applying for a loan thinking that it will improve their scores. If...
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