When looking to improve your credit score, there are a number of ways you can go about it. Minimizing your balance and making credit card payments on time are just a few ways you can achieve this task, but you shouldn't take all credit repair advice to heart. By listening to bad credit tips, your credit score could take a drastic hit that could have repercussions in other areas of your finances. Here are a few things to stay away from when trying to improve your credit score:
Paying off the remainder of your balance can be a great feeling, but you shouldn't close this account. By shutting down an account, you will raise your credit utilization rate – the ratio of how much of your balance you use compared to your limit – which in turn will knock your score down a few points. A credit utilization rate is one of the most important components of a credit score, and closing an account will send this ratio through the roof.
If you have paid off this account but do not want to accumulate a heavy amount of debt, try using this card to make small purchases. With conservative purchases, you will be able to build up your credit and prevent yourself from going deeper into debt.
Carrying a large balance
Consumers may believe that carrying a high balance will help them boost their score. Although spending is an integral part to building credit, you should avoid this train of thought. Overspending can cause you to eat up a good chunk of your limit, which affects the state of your credit score.
When trying to improve your credit score, you should use your card in moderation. Small purchases won't have too dramatic an effect on your score as long as you are not using it every day.
Using a debit card
You may think that all your bank and credit card accounts are linked together, but that is actually not true. Using other credit cards conservatively can help you build up your score, but one card that has no effect on your score is a debit card. A debit card will only take actual funds from your bank accounts and is not an extension of your credit. Before you start using your debit card for all of your purchases, be aware it won't help raise your score.