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07-25-2016, 01:33 PM #1
My Biggest Credit Score Mistake - Closing Old Accounts and Opening New Ones
When I was a foolish spender, I would often open new store accounts just to take advantage of a one time discount. And get those coupons.
Then I wised up. By the time I paid off all my credit card debt, I was pretty excited. And I may have overtaxed. Because I closed down all but one of my credit cards. (But kept those store accounts ... for the coupons.)
What happened though was that my credit score dipped.
It took me a while to figure this out. But credit scores include factors like the average age of accounts and the ratio of actual debt to available credit. So keeping the old accounts open helps on two accounts.
And I think it looks better to lenders to see that you have kept a card a longer time, and don't just take out new cards to snag a deal.
So my advice is to keep the average age of your account up by resisting the temptation to close older cards just because you will be using them less.
07-25-2016, 09:33 PM #2
As long as we are sharing, my biggest mistake was incurring late fees. Too much debt. Huge penalties. And a credit score not worth a penny tails side up on the floor of a truck stop restroom.
07-26-2016, 05:38 PM #3
As long as we are sharing credit mistakes, here is one I did not make but many people I know have: co-signing for a loan.
Even if it is family, don't do it.
I'm not going to get into details, but you can imagine. Kids turning into addicts. Boyfriends turning into losers. Every time it ends up very badly.
08-05-2016, 04:33 PM #4
For me, all of college was my biggest credit mistake.
First, taking on a bunch of student debt. Second, taking out a credit card and only paying the minimum balance.
By the time I graduated, my credit score was trash. My mom had to co-sign my first lease I could have a place to live. That was 1999. It took me until 2003 to get my score high enough that I was able to get my first cell phone.
08-06-2016, 01:42 PM #5
My biggest credit mistake is late payments. I was just not organized about making sure to pay my bills. Which is crazy, because I always had enough to make my payments.
At first, I could get late fees waived. But it kept happening. Finally, I wised up and set up auto payments.
I look back on young me and just wonder some times.