ConsumerWatch: Avoid credit score killers - WTVM.com-Columbus, GA News Weather & Sports

ConsumerWatch: Avoid credit score killers

By Zaneta Lowe  - bio | email 

COLUMBUS, GA (WTVM) - Cell phone companies, insurance providers, and your landlord.

What do these three have in common?  They all check your credit score to see how likely you are to pay your bills.  Of course, as a consumer, you need a good credit score to get better rates on mortgages, cars, credit cards.

But what makes up that score?  Here's a break down from myfico.com.  Payment history accounts for the majority, or 35% of your score.  So the number one credit score killer? Making repeated late payments.  Experts say you can deduct up to 200 points for three or more missed due dates within a year.  The solution, whatever you do, pay your bills on time.

Another 30% of your score represents the amounts you owe.  This includes balances, plus the ratio between how much you owe and your available credit.  The killer here, maxing out credit cards.  Experts say this can hurt your score by 100 points.  The fix?  Some say it's a good idea to have 90% of your credit freed up at any given time.

Believe it or not, another one that can take about a hundred points from your credit score is closing old cards.  One piece of advice is to keep the card with the largest credit limit open.

Deduct up to 40 points for excessive inquiries.  According to financial experts, these are hard inquiries, which happen when you apply for a credit card or a loan.  These are different from what's called "soft inquiries."  Those are requests made by you, or say, a utility company that's not related to a lending decision.  In this case, experts say your score won't take a hit.

Copyright 2011 WTVM. All rights reserved.

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