The 10 Worst Things you can do when you are building credit

As you discover how to build credit as quickly as possible, there are certain actions that you should avoid. These actions may damage your score or violate the law. This is what you need to know ...

Some credit repair scammers tell you that they have an instant solution to get away from bad credit. They tell you that all you need to do is use a different Social Security number to start a new credit profile. This is very, very illegal. It amounts to a Social Security fraud, which is a criminal offense that can even lead to spending time in jail.

If a credit repair company Promo Suzuki Ertiga tells you to do this, run away from there. Then report them to the Federal Trade Commission (FTC).

It is a variation of the scam mentioned above, which consists of starting a new credit profile as a business. Use an employer identification number (EIN) to start a new profile and apply for credit lines. Basically, you will be personifying a business. This is also totally illegal and may result in a criminal prosecution for fraud.

To be clear, there is no quick and legal solution to move from a 500 FICO score, instantly to 800. It takes time and works to build credit. Don't break the law trying to get there faster!

As we mentioned Promo Suzuki Ertiga earlier, the most important factor used to calculate your credit score is payment history. That makes unrealized payments incredibly bad when you want to build credit. A payment lost now can make it go back significantly. And it is much worse than having had some payments lost in the past.

The "weight" of the negative credit elements decrease in their weighting, as time goes by. So, a payment not made last month has a greater impact than what was lost seven years ago. (Seven years is when the penalties for payment default expire, so they cease to appear in your report).

It is not possible then to lose a payment and compensate for that damage with a positive payment. It will take many positive payment records to compensate for that one mistake. That's why you'll want to add credit slowly to make sure you can always keep up with payments.

It is important to keep in mind that a lost payment is any payment made more than 30 days late. A late payment made within that billing cycle should not be reported to the credit bureaus. They only report the default of payments 30, 60, 90 and 120 days late. Even so, avoid paying late, as that creates charges and penalties.

The "use of credit" is the second factor's biggest credit score. Measure how much debt you have compared to your total available credit limit. So, if you have two lines of credit at $ 500 each, your total credit limit is $ 1,000. If you have a balance of $ 250 between the two cards, your utilization rate is 25%.

Less credit utilization is always better. Any amount below 30% is considered "good" for this factor. However, even lower, it is even better. And the idea that you must keep balances on your credit cards to have a good credit score is a myth. If you are trying to find out how to generate credit as quickly as possible, paying full balances actually provides the best possible utilization ratio.

On the contrary, accumulating balances and maximizing your cards is bad for your credit. If your debt becomes more than 50% utilization, seek debt relief immediately.

Always remember that a credit score is a number that measures your risk as a borrower. Then, any action taken by a high-risk borrower will reduce your score. Taking too many lines of credit in a short period of time makes it a high risk because there is a question about whether you can make payments.

That is why it is really only convenient to request one line of credit at a time. Ideally, credit applications should be spaced in approximately six months between them.

“Credit age” is a minor factor used to calculate your credit score, but it still counts. Basically, longer credit use time makes you a lower risk, because it has shown that you can manage credit and long-term debt. Therefore, the old accounts that you have kept in good condition are good for your credit.

But this means that closing old accounts can actually damage your credit score. Keep those accounts open and in good condition, to avoid unintentional damage to your score.

This is related to the previous topic. If you do not use an account for a long time, the creditor may close it due to inactivity. This would have the same effect as closing the account yourself. The “age or seniority” of your credit history will then decrease.

With this in mind, you should not simply keep accounts open and not use them to generate good credit. If you have an old account up to date, look for a modest use for the card. Choose something you can pay in full each month. For example, use it to cover groceries, gasoline or a recurring expense such as tolls, something that is in your regular budget and should be covered anyway. This way, you can use the account and pay it each month using the cash flow that would have covered that expense.

We focus specifically on medical bills because if you are up to date with all your other debts, collections should not be a problem. However, insurance breaches can often generate medical expenses out of pocket that you don't know you should. It happens very often. People think that insurance covers an emergency visit or other expense, but their insurance does not cover all or part of it. The invoice is not paid and ends in collections. As a result, it ends on your credit report.

Any account in collections will be bad for your credit, so you should avoid them in general. However, medical bills can be that thorn in your side that slips and ruins all your hard work. Make sure you are aware of the medical costs and check that the insurance pays. Otherwise, you can go back significantly with this single error.

Accounts in collections are not the only public record that can negatively affect your credit. Any debt you owe as a result of a court order will create a public record that will appear on your credit report. This includes criminal or civil court fines, as well as things like unpaid alimony or child support.

This means that you cannot ignore your civil obligations to focus solely on paying debts to generate credit. In other words: don't stop paying child support while you are developing your credit! If you cannot pay both, reduce your use of credit, or ask the court to adjust your payments.

Another way to incur debt that will appear on your credit report is to not pay your taxes. If you owe back taxes and the IRS imposes a lien on your property, this will also appear on your credit report. In fact, an unpaid tax lien is the worst possible credit fine. It is even worse than bankruptcy or foreclosure!

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