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credit score gauge
A worthy credit score is of significance if you want to be entitled to future loans. Maintaining a good credit score is not a distant dream, provided you manage your finances wisely. Handle your credit responsibly and avoid making credit mistakes to keep your score at an optimum level. A simple mistake can ruin the possibility of acquiring future credits.

While some credit score killers are difficult to evade, such as failing to make a mortgage payment because of unemployment or maxing out your credit cards because you are swamped with medical bills, many credit blunders are simply due to negligence and can easily be avoided.

Credit Mistakes to Avoid

Not Paying Your Bills On Time

You may have the required amount to pay off a loan, however, if you are unaware of the deadline or accidentally fail on a payment, it could cause a major dent in your credit score. Even if the bank does not report you to the IRS for paying a late fee, it will charge you a hefty penalty which otherwise could have been avoided. Late credit card payments can be charged very high penalties. Therefore, it is important that you pay the amount due on time. To avoid credit mistakes related to late payments, you can use an automated payment process offered by banks. This will pay off the minimum amount and give you enough time to make the remaining payment.

Prioritizing Payments Incorrectly

Prioritizing your debt payments is an essential element of keeping a worthy credit score. Most people usually prioritize bigger loan payments such as personal loans and mortgages over credit card loans, which makes sense. Defaulting on a bigger loan payment can result in more critical financial circumstances for you, rather than missing a credit card payment which is going to cost you 1% or 2% of the balance. However, this is not a hard and fast rule and, depending on the payment amount, you should prioritize the payments. Some credit card payments might be necessary to pay off as they are compounded. Therefore, prioritize according to the situation.

Not Checking Your Credit Report Regularly 

Checking your bills for any discrepancies can be a tedious task but it must be undertaken regularly. Sometimes, there could be items on your credit report that are either charged by mistake or if someone has misused your credit card information. You will never be able to know about any possible errors if you do not check your credit report from time to time. You can dispute these charges within 60 days and that is only possible if you are aware of them. Though, charges related to fraudulent activities might allow you a longer time to dispute a charge. Not checking your credit report is one of the worst credit mistakes you could make.

Closing an Old Credit Card Account

You might be tempted to close an old credit card account, which has remained unused for quite a while. However, unless you are being charged a high annual fee, it can be a grave mistake. Closing a credit account can significantly lower your credit score which will ultimately lower the amount of credit you can acquire. Basically, it affects your credit utilization ratio which is an important component of measuring a credit score.

Closing your oldest cards with a history of on-time payments can be the worst credit mistake as it can significantly dampen your chances of acquiring a loan. Lenders like to see credit accounts with a long history of on time payments. Closing the account means that it is eventually written off from your credit report. Instead of having a positive impact on the credit report, it actually affects it negatively. Even if you are not using an old credit card, it’s better to keep it in a drawer and make recurring payments to it so that the bank does not close it due to inactivity.

Conclusion

Avoid these credit mistakes, at all costs, if you want to promise a secure financial future for yourself.

Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

 

 

 

 

High Angle View A Person Filling Credit Score Form
Your financial health is crucial for maintaining a stable lifestyle. Not only does it reflect well on your personal profile but it is also critical in matters related to your bank and finances. Credit is the deciding factor when you apply for a loan, either for a home mortgage or a loan for your favorite car. Credit scores can affect financial health and stability of an individual and, hence, keeping a constant check on this score can greatly influence one’s purchasing habits. Your credit score will determine if you qualify for lower interest and insurance rates or not. Therefore, if you are among those individuals who are actively seeking ways to get their credit score to rise, you will find 7 ways to do so below.

1. Monitor your Credit Report

The first and foremost step towards improving your credit score is to monitor it thoroughly and make it a habit. According to research, credit reports tend to have errors that can be harmful to your financial standing, thereby affecting the overall score. With the rise in identity theft and credit card frauds, it is likely that there may be inaccuracies in the report. Make sure to check for these and keep an eye on your credit score often.

2. Lower your Debt

Another way of raising your credit score is through paying off debt. Even when partial debt is paid off, the credit score tends to go up. Hence, instead of having to move around these obligations, it is recommended that you reduce debt obligations as much as possible. Credit Utilization Ratio is a measure of one’s debt as a percentage of the total credit available. A lower ratio is usually preferred in order to improve the credit score significantly.

3. Request a Higher Credit Limit

Alternatively, an increase in a credit limit may be acquired if sufficient cash is not available in order to settle debt obligations. When the total credit limit is higher, the credit utilization ratio is likely to go down, ceteris paribus. However, an important point to note here is that if you have a poor credit history in the past, this limit increase request may not be entertained. It all comes down to how well you manage your shopping and spending habits!

4. Pay your Bills on Time

Payment history has a substantial impact on your credit score. The simplest approach to achieving a higher credit score is through prompt payments. Analogous to bookkeeping, an individual can keep a record of all of their debits and credits in order to track balances and arrears at the end of each month. Arrears may be settled once cash becomes available.

5. Don’t Close off Accounts

In order to maintain a reasonable credit score, keeping all your new and old bank accounts open can be helpful. Each one of your accounts contributes to your credit history and closing either one will effectively lower your credit score. Moreover, if any one of the accounts becomes redundant, instead of having it canceled, it is better to keep it operational.

6. Keep your Balances Low

Make sure to keep lower balances on your credit cards in an attempt to improve your credit score. Account balances should effectively be below 75 percent of the available credit. This must be ensured in order for it to reflect well on your credit score.  This can be exercised by keeping a track of the balance on a month to month basis. A little more effort from your end can pay off in the long run.

7. Improve your Buying Habits

Lastly, a healthy credit score can be maintained if your buying habits are tweaked a little. For all of you shopaholics out there, keep your expenditures spread across various months in order to avoid draining your available credit limit. This is likely to ensure a balanced credit usage between months. Payments can be made as soon as the month ends, hence, improving your credit score each month. A viable balance of payments and credit usage can thus be achieved.

Conclusion

Using these 7 easy tips, you can improve your credit score without having to worry about subsiding the urge to purchase your favorite items.

Check out America's Best Bookkeepers


About Complete Controller® – America’s Bookkeeping Experts
 Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

Bad credit word on grey background
Everyone isn’t a master at banking, bookkeeping, accounting, and economics. We can all make mistakes that hurt our credit scores and ratings, without even knowing it. Here is a guide to what mistakes you might be making, in order for you to improve your credit score.

1. Closing Old Credit Cards

Once you’ve paid off a credit card bill entirely, it is tempting to cancel the card to avoid getting another big bill again. Many people choose to close their accounts like this but what they don’t know is that they are actually hurting their own credit rating. This is because closing a card causes you to have lower available credit and available credit, along with the history of credit cards owned, both affect your credit rating. It is a much better decision to keep an old credit card open and avoid using it.

2. Maxing out Credit Cards before Bankruptcy

When considering filing bankruptcy, many people find it tempting to put extra expenses on their credit cards, anticipating that the debt incurred in those expenses would be wiped out when filing bankruptcy. However, upon seeing that someone maxed out their credit cards right before bankruptcy, creditors can and will take measures against your bankruptcy in court. This can also lead to a judge rejecting your petition for bankruptcy, causing a much bigger financial crisis.

3. Applying for Gas Station and Department Store Cards 

It may sound really smart to have all of your gas expenses on one card and all grocery related expenses on the bill of another credit card. Unbeknownst to consumers is the fact that these cards come with extremely high interest rates. It is much better to go for Visa or MasterCard credit cards which have much lower interest rates. Moreover, having several accounts will adversely affect your credit score. Therefore, only apply for an additional credit account when you really need it. 

4. Cosigning for Someone

It isn’t easy to decline a request from someone close to you to cosign for him/her on any kind of loan. However, it isn’t commonly known that cosigning can result in pretty bad consequences for someone’s credit rating. Not only is your credit score under threat, you might even be liable to pay the loan if the person you cosigned with fails to pay. 

5. Sharing Personal Details

Calls asking for sensitive and private information such as credit card numbers or your social security number are scams looking to target vulnerable groups (such as the elderly). Calls like these are usually from criminals trying to use your personal information to steal your money. In the case that you ever fall victim to identity theft, it is best to report it to the police department and the Federal Trade Commission. Criminal activities through your card can badly hurt your credit score.

6. Accepting Offers for New Credit Cards

Offers from credit card companies are rampant. According to statistics, there are billions of offers sent out by companies every year. Accepting these offers is neither a compulsion nor a wise decision. The solution is just to say no if you are ever targeted in a sales pitch. Ask to be removed from telemarketing lists and reject any offers from mortgage and credit card companies coming via email and phone. More credit means more hits taken to your credit rating. Accepting tempting offers can hurt your financial position through loans that take a lifetime to mature or plans that involve high interest rates.

7. Ignoring Credit Reports

It is important for you to check credit reports at least once every year if you want to maintain a good credit score. Sometimes, a once a year check might not be enough so you should keep a routine check on how you use your credit card. If you are only making minimum payments, missing out on payments, or not thinking about how you will pay your bills when you are charging your card, you should halt your credit card use and seek professional help from a credit counseling nonprofit agency.

8. Opting for Credit Repair Schemes

Many people who go through a personal crisis such as bankruptcy, foreclosure, or divorce end up with a bad credit rating. Falling for a credit repair scheme offering to quickly fix your credit score sounds like and is too good to be true. It is essential for you to be wary of firms that promise to fix your credit standing in order to avoid paying a high fee upfront and being subject to multiple hidden charges.

Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

Bad credit word on grey background
Everyone isn’t a master at banking, bookkeeping, accounting, and economics. We can all make mistakes that hurt our credit scores and ratings, without even knowing it. Here is a guide to what mistakes you might be making, in order for you to improve your credit score.

1. Closing Old Credit Cards

Once you’ve paid off a credit card bill entirely, it is tempting to cancel the card to avoid getting another big bill again. Many people choose to close their accounts like this but what they don’t know is that they are actually hurting their own credit rating. This is because closing a card causes you to have lower available credit and available credit, along with the history of credit cards owned, both affect your credit rating. It is a much better decision to keep an old credit card open and avoid using it.

2. Maxing out Credit Cards before Bankruptcy

When considering filing bankruptcy, many people find it tempting to put extra expenses on their credit cards, anticipating that the debt incurred in those expenses would be wiped out when filing bankruptcy. However, upon seeing that someone maxed out their credit cards right before bankruptcy, creditors can and will take measures against your bankruptcy in court. This can also lead to a judge rejecting your petition for bankruptcy, causing a much bigger financial crisis.

3. Applying for Gas Station and Department Store Cards 

It may sound really smart to have all of your gas expenses on one card and all grocery related expenses on the bill of another credit card. Unbeknownst to consumers is the fact that these cards come with extremely high interest rates. It is much better to go for Visa or MasterCard credit cards which have much lower interest rates. Moreover, having several accounts will adversely affect your credit score. Therefore, only apply for an additional credit account when you really need it. 

4. Cosigning for Someone

It isn’t easy to decline a request from someone close to you to cosign for him/her on any kind of loan. However, it isn’t commonly known that cosigning can result in pretty bad consequences for someone’s credit rating. Not only is your credit score under threat, you might even be liable to pay the loan if the person you cosigned with fails to pay. 

5. Sharing Personal Details

Calls asking for sensitive and private information such as credit card numbers or your social security number are scams looking to target vulnerable groups (such as the elderly). Calls like these are usually from criminals trying to use your personal information to steal your money. In the case that you ever fall victim to identity theft, it is best to report it to the police department and the Federal Trade Commission. Criminal activities through your card can badly hurt your credit score.

6. Accepting Offers for New Credit Cards

Offers from credit card companies are rampant. According to statistics, there are billions of offers sent out by companies every year. Accepting these offers is neither a compulsion nor a wise decision. The solution is just to say no if you are ever targeted in a sales pitch. Ask to be removed from telemarketing lists and reject any offers from mortgage and credit card companies coming via email and phone. More credit means more hits taken to your credit rating. Accepting tempting offers can hurt your financial position through loans that take a lifetime to mature or plans that involve high interest rates.

7. Ignoring Credit Reports

It is important for you to check credit reports at least once every year if you want to maintain a good credit score. Sometimes, a once a year check might not be enough so you should keep a routine check on how you use your credit card. If you are only making minimum payments, missing out on payments, or not thinking about how you will pay your bills when you are charging your card, you should halt your credit card use and seek professional help from a credit counseling nonprofit agency.

8. Opting for Credit Repair Schemes

Many people who go through a personal crisis such as bankruptcy, foreclosure, or divorce end up with a bad credit rating. Falling for a credit repair scheme offering to quickly fix your credit score sounds like and is too good to be true. It is essential for you to be wary of firms that promise to fix your credit standing in order to avoid paying a high fee upfront and being subject to multiple hidden charges.

Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.