Stop killing your credit! 6 mistakes to AVOID immediately

all the time you get credit card companies sending mail advertisements asking you to apply to awesome new credit cards with great perks and while the card might be good and get you things like free travel and hotels you might be unaware of the potential mistakes you could be making that could lead to a lower credit score so for your awareness here are six credit mistakes you could be making so let's get started but first let's do an overview of what makes up your credit score so your credit score is a number between 3 850 and the number that you have in that range will tell lenders How likely you are to repay the money that you borrow you want to have a good credit score because that helps you to have a good rate on a mortgage or car loan or it can help you to get approved for a new credit card running from basic cards to ones with premium benefits and generally good credit needs to be above 670 but if you want to be in the great range that number needs to be above 740 and this credit score it's calculated based on on this formula so you have 30% for credit utilization 35% for payment history 10% for new credit 15% for length of credit history and 10% for credit mix finally something important to note is that your FICO score and might vary depending on the credit bureau and there are three credit bureaus so there's experion Equifax and Transunion and credit cards may pull and send data to one or two of these bureaus instead of all three so sometimes when you apply for a new credit card your FICO score that you see in your bank app might be different so that's some important background information to know so now let's get into the credit mistakes number one missing payments so it's important to not miss any payments for your credit cards or whatever loan you have from the chart that we saw before you're looking at the highest factor that contributes to your credit score and even just one late payment can affect your score I actually had a case where I forgot to to make my first payment on my new credit card and it was actually for the built MasterCard I found it difficult to understand that I had to set up a Wells Fargo account and from there I could set up my automatic payments so to fix this I would highly suggest setting up automatic payments that way you won't forget and you won't miss a payment also there is a way to change your payment due date if that's your issue that the payment Falls before your paycheck so you can communicate with your credit card issuer and though it might take some time to actually have this change take place sometimes it's better to have the money in your account when you need to make that payment and of course if you don't have any money to begin with to make that big purchase you might need to think twice if you want to use a credit card to buy it the second mistake is only making minimum payments and while I agree it's better to make the minimum payment instead of not making a payment at all you should still try try to pay the full amount and why because you'll be carrying a balance and when carrying a balance on your card unless you have a 0% APR card your interest charges will grow with your balance but even if you do have a 0% APR card I would still suggest to pay off that debt as soon as possible because debt can creep on you and usually the minimum payment that credit cards ask for is a very small percentage of the balance that you owe more like one or 2% of your balance so when you go months with only paying that minimum balance you are gradually carrying a greater and greater balance on your card and this ties with the third mistake on this list which is going over your credit utilization so if you remember that chart before you'll see that credit utilization accounts for 30% of your credit score so what does this even mean well if you look at your credit card it will tell you your credit limit so let's say that you have a $99,000 limit and if you're carrying more than 30% that's about $33,000 you would be going over that 30% limit so when you go over 30% that can dip your credit score and it's even worse if you're maxing out your credit cards and also just a side note credit utilization is accounted for by totaling all of your credit cards together but I would still try my best to keep the balance under 30% per card that's just Peace of Mind actually the other day I had to max out one of my credit cards and that card only had a $66,000 limit because I had a huge purchase coming up and I also wanted to meet that welcome bonus well if this ever happens to you as soon as the payment comes off of pending just pay it right away and again this is why you might want to have multiple credit cards so then you can spread payments out fun fact my favorite flower is the p and if if you like flowers or you like this video please hit the like button thanks so much the fourth mistake is applying for multiple credit cards at once applying for many credit cards within a short period of time can affect your credit score and for one when credit card companies see multiple hard inquiries within a short period of time they find it a bit strange and might be cognizant to approve your application and plus each time you apply for a credit card even if you're Deni that application that hard pull will stay on your credit report for 2 years and generally you want to have six hard pulls or less within a 2-year span now hard inquiries or hard pulls only account for 10% of your credit score so it's generally not something you need to worry about but if you're suffering in credit then you should try to minimize the amount of hard pulls as you can also as a side note if you're shopping for a car loan or a mortgage you don't need to worry too much about the amount of hard pulls within a span of 15 to 45 days because these multiple credit inquiries they will actually account for only one inquiry again this only applies to home or auto loans as credit cards are looked at differently and final tip for this one if you're on the lookout for a credit card but you're not sure if you're going to get approved there are a lot of banks that have pre-approval Checkers and you won't get your credit pulled so the chances of whether you're approved are likely to be calculated there so I would suggest checking these because it really sucks to get declined the fifth mistake is closing old credit card accounts unfortunately a lot of people don't realize that closing their old credit cards is a huge no even though you probably don't use your first credit card and it doesn't have any perks these credit cards are actually very important because they account for your credit history and when you close older credit cards that lower is your average credit history and for this reason it's probably a good idea to not apply for cards with Annual fees as your first credit card and let's say that you do have a credit card and it has an annual fee but you no longer want to keep it well you are in luck because a lot of credit cards have downgrade options though you do need to keep in mind that there are some cards that don't have direct downgrade options for instance the chasea are preferred if in the future you no longer want to pay that $95 annual fee you can call Chase and ask them to downgrade it to the freedom Flex this is the best way to get rid of a credit card that has an annual fee and you don't have to close it and finally number six you don't have a credit card if you don't have a credit card or you're limiting to yourself to Only One credit card then you're losing out on a lot of opportunity to improve your credit having multiple credit cards can actually improve your credit score because because it will lower your debt to credit ratio which is credit utilization so your overall credit limit will increase across multiple credit cards and also when you have multiple credit card accounts it also suggests to lenders that you know how credit works and you're able to manage the amounts that you borrow so actually when I was young I had this misconception that if I had more than three credit cards there would be some sort of consequence and that's not true to be real the downside on having multiple credit cards is just managing them all but nowadays having these Bank apps it's pretty easy to have a high level view on how your credit cards are doing so it's not really a hassle if you're responsible also it is true that some banks will close your credit card if you don't use it within a period of time and I did have this almost happen to me but actually the bank will send you a notice in the mail and then they'll tell you that you need to either use the card or you'll lose the card so just use that old card and buy a pack a gum and you can forget it for another 2 years so let me know did you all find any of these tips useful also thanks for sticking to the end you might have noticed that my voice is slightly different I am getting over a cold but I'm getting better thanks again for watching and I'll see you in another video bye