Labor Day weekend is a celebratory time for many hardworking Americans. As you prepare to shop and enjoy the holiday with friends and family, give your credit scores and reports a quick “performance review” to be sure they’re working hard for you!
Your credit scores can be a powerful negotiating tool – so it’s important they work to your benefit.
Did you know your credit scores determine the interest rate you get from lenders? In turn, that interest rate determines your monthly payment amount. The higher your scores, the better your interest rates and the lower your monthly payments on everything from credit cards to an auto loan to a mortgage.
It doesn’t take much for your credit scores to slack off.
Your scores change as new information is reported by your creditors. A missed payment here, a maxed-out credit card there – even an undetected error on your credit reports can negatively affect your scores, resulting in a “pink slip” from potential lenders. Certain credit activities that may seem harmless can “downsize” your credit rating.
Are you using 30% or more of your total available credit?
If so, your credit scores are paying the price. Your debt and how you manage it makes up 35 percent of your credit scores. And while having accounts with balances doesn’t automatically increase your risk as a borrower, if you’re close to maxing out your available credit limits, it may indicate that you’re stretched thin financially and are more likely to pay late, miss payments or default on your debts.
Are you considering cutting up a credit card or two?
It’s common for those of us who have old, unused credit cards (or who can’t resist pulling out the plastic when we shouldn’t) to think about reaching for the scissors. Seems like a no-brainer that eliminating some of your plastic can only help, right? Not exactly. Turns out that closing credit card accounts can shorten your credit history and do your scores more harm than good.
Don’t sabotage your own hard work!
To make smart decisions about your credit, you’ve got to know exactly where you stand, and why. Stay informed about changes to your credit reports from TransUnion®, Equifax® and Experian®, and conduct regular evaluations of your credit scores to make sure they aren’t lying down on the job.