Your credit score is a pretty powerful number that can affect your borrowing opportunities, interest rates and possibly even job options (depending on your line of work). While making the decision to start working on your credit and improving your credit score can be the first step to getting your finances back on track, however, certain things you do can end up subverting your efforts.
Knowing just what these things are is important to avoiding them and making your hard work to improve your overall financial situation effective and worthwhile.
When You Want to Boost Your Credit Score, Do NOT…
Mistake 1 – Only make the minimum monthly payments on all of your debts
Only paying the minimum monthly amount on any debt will mean that you are only ever covering the interest payment on that debt – and that you are not chipping away at the principal. While this can end up meaning that you pay way more to resolve the debt, it also will not help you make any headway in improving your credit score, as you will not be changing your overall debt to income ratio if you only pay the minimum amounts.
Mistake 2 – Pay some bills at the expense of others
One fundamental step to digging yourself out of debt is usually to pay more than the minimum monthly payment on at least one of your debts – but, more ideally, a few or more of your debts. If, however, you end up doing this at the expense of another debt, paying more to one creditor but then not making the minimum monthly payment to another, you will be sabotaging your efforts to improve your credit.
In fact, if you miss even just one debt payment, you can experience negative credit impacts, complicating your efforts to improve your financial outlook.
Mistake 3 – Open up new lines of credit
This is generally a bad idea for anyone pursuing debt relief because another line of credit can mean more ways to accumulate debt. This, in turn, means another debt added to your credit report and, most likely, a drop in your credit score.
So, don’t open up new credit lines when you want to improve your credit score. Instead, try to only purchase things you can pay for outright, and plan ahead to save for things you need if you have to make larger purchases.
Mistake 4 – Accumulate hard credit inquiries
Did you realize that even simply shopping around – without making a purchase – can also ding your credit? In fact, when you shop for more expensive items (like vehicles or homes), sellers or lenders can make hard inquiries on your credit, and it will only take a few of these to start damaging your credit.
Contact Denver Bankruptcy Lawyer Jon B. Clarke Can Help You
If you are overwhelmed by seemingly insurmountable debt and are looking for a financial fresh start, contact trusted Denver Bankruptcy Lawyer Jon B. Clarke for experienced help pursuing your best debt relief option.
To get answers from an experienced and esteemed lawyer, contact us today. We encourage you to complete our Business or Consumer Debtor Analysis Form. You can also get answers from Denver Bankruptcy Attorney Jon B. Clarke by calling our firm at (866) 916-3950 or by emailing us using the contact form on this page.
From our offices based in Denver, Castle Rock and Greenwood village, we take pride in providing people throughout the state of Colorado with the highest quality debt relief legal services.