What’s affecting your credit score?

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What’s affecting your credit score?

You will find there are some big surprises in this article “What’s affecting your credit score?”:

1 – Having a “spur of the moment” credit card (e.g. the Bay) even if paid off and never used again can count against you – unless you cancel the card!  Many people think that if they just cut up their cards that were paid in full, that would be sufficient… Not true! You must call and actually cancel it.  Make sure you receive something in writing stating the account was successfully closed.

2 – Credit utilization (your balance divided by available credit) is not based on a month-end balance.  Therefore, paying it off in full at month-end will not necessarily provide the advantage it should!  It’s possible the cards will be reported in the middle of the month right after you put a large expense on the card.  I’ve been known to put large amounts on my card to receive the “free groceries” or other perks they offer, and then pay the card off the next time I’m at my computer.  I’m sure some of you reading this do the same thing.  It could be reported when your balance is at its highest, not necessarily at month end when it’s paid in full.

3 – If credit score is below 600 (out of 900), then you end up with a ‘Tier II’ mortgage at much higher rates, plus other additional costs!  It’s important to check your credit report to make sure there are no factual errors that will bring down your score.  If you take the time to make sure your creditors report correctly, it may put money in your pocket later on.