As long as you are paying your debts, you can’t be making any debt management mistakes, right? Wrong. Most people make the same common mistakes over and over again when it comes to managing their debts. Doing so costs them numerous credit opportunities, but it can also cost them more in the way of excessive interest and fees.
If you find that you are managing your debt the best way you know how, but you still aren’t making any progress, it may be time to talk to your lawyer about debt management options. For the time being, just try to avoid making the mistakes discussed below.
Carrying Balances from Month to Month
Many consumers still believe you have to carry a balance from month to month in order to build good credit. However, this method only ends up costing you extra money in interest payments. If you pay your balance in full each month, your activity is still reported to the credit bureaus. However, because you have paid the entire balance within the grace period, you avoid paying interest. This is especially helpful if you happen to have a card with a high interest rate because those interest charges can become costly and grow out of control.
Applying for Too Much Credit
First of all, it’s important to know the difference between a soft credit check and a hard credit check or inquiry. Hard credit checks can impact your credit score and leave you unable to open new accounts. The more hard inquiries you have, the lower your credit rating and the less likely you are to get credit offers.
On top of that, your current creditors can see that you are applying for more credit, which could raise a red flag. This may make them get more aggressive with their collection efforts, as they assume you are desperate to acquire as much credit as possible. Instead of applying with multiple creditors within a short period of time, investigate a few of them and spread out your applications over time.
Before applying for credit, it’s a good idea to ask about minimum credit scores that some creditors may require. This will help you avoid unnecessary checks on your credit. If your credit score fits the criteria, applying may be worth the effort. If you do get denied, ask for a written reason why that decision was made. For other information on credit, debt management, or bankruptcy, click here (http://www.zerodownbankruptcy.com/).
Closing Old Credit Accounts
Consumers often make the mistake of closing old credit accounts in order to clean up their credit. However, older credit accounts factor into your credit score and are worth more than a bunch of new credit accounts. If it doesn’t cost you anything in fees to keep the accounts open, it’s better for your credit rating to use them occasionally instead of closing them.
For debt management, credit, and bankruptcy questions, call 1-800-DEBT-RELIEF (1-800-332-8735) for a free initial consultation.
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