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Mistakes That Can Send You Into the Bad Credit Zone
Author David Schneider | May 23,2007
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Alex was a busy professional who decided to buy an expensive car. To get into the car Alex needed an extra $5,000 to put down on his car loan. To get the money Alex decided that he would just not pay his six credit card bills this month and then double up on the payments next month, after all, he was expecting a bonus check next month that would more than cover the late fees, extra interest charges and larger minimum payments. Alex went ahead, bought his car and caught up with his credit cards the next month. A year later Alex decided to buy a house. However, when he applied for a mortgage at his bank they turned him down because he had six late payments in his credit history that had occurred within the last 12 months. This seemingly logical payment strategy had cost Alex 20 points on his credit score and the ability to qualify for a prime rate mortgage. Many mistakes can send you into the bad credit zone. If you would like to avoid making these mistakes, you first need to know what they are.
Over-Extending Your Credit
The first credit mistake that can send you into the bad credit zone is over-extending your credit. Many people think that the more credit accounts that they have in good standing the better their credit will be. Unfortunately, this is not entirely true. While it is true that having several credit accounts in good standing can help your credit score, having high credit card balances can hurt your credit score. The best way to use credit accounts to improve your credit score is to have large credit lines open with low balances.
Missing a Payment Every Now and Then
Another mistake that can send you into the bad credit zone is to miss a payment. Even one missed payment can look bad on your credit report, and these black marks can stay visible for two or three years. To avoid making this mistake, keep track of your bills and keep your account number and payment address on hand in the event that you lose your monthly statement. Setting up email alerts to remind you to pay your credit card bills also can help you stay on top of things.
Applying for Too Many Credit Cards At Once
Every time that you apply for a credit card, an inquiry is posted on your credit report. Too many credit inquiries at one time will hurt credit score. This can reduce your chances of approval for a credit card and it can reduce your chances of approval for a mortgage.
QuoteMatch.com
If you are ready to take the first step towards home ownership, then you should visit QuoteMatch.com. Fill out their mortgage quote request form, submit it to QuoteMatch.com and wait for your pre-screened mortgage quotes. Get into a new home this year. Go to QuoteMatch.com now. |
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