Cancelling Credit Cards

You may be thinking to yourself "how does cancelling credit cards hurt my credit? Shouldn't it help?"� The answer to that question is "not always."� One factor credit agencies look at is the average length of your credit history; the longer your history the better. If you cancel credit cards that have accounts that are relatively older than your other accounts, your average length of credit history will be shortened, and your credit score will go down. If you have an older account that you simply don't need or want anymore, refrain from closing the account. The best thing to do is leave it open even if you stop using it.

Not making timely payments

Another thing credit agencies look at is payment history. If you don't make timely payments to your credit card company when they are due, your credit score will be negatively affected. Make an effort to make sure payments are made in full when they are due. In order to avoid getting into trouble, don't make large purchases that you will not be able to pay off entirely when they are due.

Non-mortgage installment loans

An installment loan is debt that is paid back in increments. Two common examples of installment loans are car loans and student loans. Credit agencies weigh the balance of your installment loans against what you originally owed on the loan. As you make payments you will owe less and less as a percentage of the original amount and your credit score will not be as affected by your loans. Try not to take out loans unless it is necessary. When you do take out loans, borrow only the amount necessary to pay for a modest car or an education.