In Part I we looked at how a Credit Score is composed and what affects the score. Today we’ll look at exactly what actions will hurt a score and how you can improve your score.
Please note that Hamilton Community Credit Union may use credit scores in conjunction with many other factors to establish an approval on loans or mortgages including your Credit Bureau. We feel that knowing how credit scores are derived is important to you for now and for your future.
What actions will hurt the score?
Missing payments. Regardless of the dollar amounts, It will take 24 mo to restore your credit score after one late payment
Credit cards at capacity (i.e., maxing out credit cards)
Closing credit cards out. Many people believe they should close cards they are not using however this lowers your available credit capacity, which in turns lowers your score.
Shopping for credit excessively. If you are constantly applying for different types of credit it will lower your score.
Opening up numerous credit accounts in a short period of time.
Having more revolving loans in relation to installment loans. Revolving loans are Credit Cards or Lines of Credit as apposed to Installment loans such as a loan for a vehicle.
Borrowing from finance companies
How to improve the score?
- Pay down on credit cards
- Do not close credit cards because capacity will decrease
- Continue to make payments on time as older late pays will become less significant with time
- Slow down on opening new accounts
- Acquire a solid credit history with years of experienc
We hope these two posts on Credit Scores have been helpful. If you have any other questions regarding Personal Credit and Credit Scores contact either branch and speak with a Member Relationship Officer today.
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