Whether you know it or not, there might be things you are doing that can effect your credit score for the worse.   Even if you aren’t buying a home soon, don’t be surprised by your credit score when you want to borrow money to accomplish your goals.

It’s better to have an understanding of what can impact your credit score, even decisions or actions you think will help your score can actually hurt it!

Sound confusing? You’re not alone since many borrowers don’t know the difference between fact and fiction when it comes to building a good credit score. 

Let’s clear it up for you so you can avoid making these mistakes below:

Mistake 1: Paying late didn’t hurt my credit since I’m caught up now.

It’s important to pay all of your bills on time, every time! Doesn’t matter if you’ve caught up … you were late and your account knows that.

If you must pay late and want to avoid damage to your score, pay the accounts that report to credit bureaus first. You can find this information by getting a copy of your credit report.

For example, credit reporting agencies say their records are updated “routinely,” but this does not mean instantly. It may take one to three weeks for your credit card company to report a payment or paid balance to the credit agencies, then more time for the agency’s reports to reflect the update. 

This is where your own credit report and the dates indicated can tell you which of your credit cards companies are more prompt in reporting and which ones may take a few more days.

Mistake 2: Dollar amounts matter in credit scores.

It may sound crazy but dollar amounts don’t matter in FICO scoring. The effect on your score is the same for a $1 late payment as a $1,000 late payment. 

So don’t take the advice to pay the highest bill first if you can pay off smaller bills first. The fewer late payments on your credit report, the higher your score—regardless of their dollar amounts.

Another way to increase your score is to have a high credit limit but low balance. It signals that you are credit worthy and have paid your bills. 

Call your credit card companies to increase the credit limit as high as possible but keep the balances so lower than 50% of your limits, and PAY THEM OFF EVERY MONTH.

Mistake 3: Closing credit card accounts helps your score.

Don’t do this!! If you cancel a card, you may have just thrown away your chance to increase your score by continuing to build on years of positive credit. If its a fairly new credit card that you’ve recognized you’ve opened it as a mistake, then its probably not going to hurt your score, but consult a lender with experience in credit repair to verify.  Let me know if you need resource for this!  

When you have a long-term and positive history with an account, it can really boost your score.  It’s better to keep your cards open and active, using them for small purchases. You can also do this to help build up your score if it isn’t high enough.