Home > Credit 101 > The Wrong Ways to Boost Your Credit Score

Comments 0 Comments

Common sense tells us that not all advice can be good advice. While there are different schools of thought on how to best manage your credit or achieve the best credit scores, there are plenty of credit-boosting ideas out there that, if implemented, could instead tank your scores.

In order to separate the good advice from the bad, you need to know credit scoring basics. First, there are dozens of different scores out there, and you never know which model a particular lender may use. Rather than focus on the number, pay attention to what generally drives your scores: behavior. You’ll want to pay your bills on time, use very little of your available credit, establish a long history of good credit use, maintain a mix of credit accounts and apply conservatively for new lines of credit.

With that in mind, here are some practices you should avoid if you’re trying to improve your credit.

1. Closing Old Accounts

You may have heard the advice that you should close any accounts you don’t use anymore, but that’s usually a bad idea. First, it can raise your credit utilization — the ratio of credit that you use compared to your credit limits. Even if you rarely use that credit card with a $1,000 limit, keeping it open keeps that extra $1,000 in your available credit, giving you more room to borrow using other cards without hurting your utilization rate. Take it away, and you’ll either need to cut spending in order to protect your utilization, or you’ll suffer the credit-score consequences.

Credit utilization is the second-most important factor (after payment history) in determining your credit scores. Also important is the length of time a credit line has been open, so closing an old account can reduce the average age of your credit, causing your scores to sag.

You can see how your debt and credit limits compare by analyzing your credit profile with the free Credit Report Card — it shows you two scores used by lenders and highlights your credit profile’s strengths and weaknesses, so you can work to maintain or improve them.

Keep in mind that if you don’t use a credit card for awhile, the issuer may close the account or reduce your credit limit, so make sure you’re on top of all your accounts. Using a credit card once a month and setting it to auto-pay could be enough to keep the account open and your available credit as high as possible.

2. Carrying a Balance

Credit cards offer the luxury of paying later for something you want to buy now, but that’s an easy thing to misuse. Not being able to pay the bill in full is one thing (and you should put a plan in place to pay that debt down), but there’s no reason to carry a balance if you can afford to make the payment when it comes due. It’s a common misconception that carrying a balance will help your credit scores, said Gerri Detweiler, Credit.com’s director of consumer education.

“They don’t understand how things are reported, and they end up with high utilization,” she said. Basically, if you continue to make purchases on your credit card without paying off the balance, you’ll end up using more and more of your available credit. Factor in the extra money you’ll owe in interest, and carrying a balance isn’t a ticket to the high credit scores you want.

More on Credit Reports and Credit Scores:

Image: iStock

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Credit.com receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team