Follow These Tips To Avoid Lowering Your Credit Score

Our Chicago bankruptcy lawyers often hear clients talk about how they need to improve their credit score after suffering from chapter 7 or chapter 13 bankruptcy in Chicago. You don't often hear people talking about trying to lower their credit score. We all know the value of a high credit score. It can help you be approved for car and home loans and ultimately a high credit score can get you a better interest rate on those loans.

We often talk about things you can do to increase your credit score. It is equally important to talk about the things that can lower that score. Some people may be lowering their score without evening knowing about it. Yahoo! Finance tells us four things we may be doing to lower our credit score.

1. Putting a large purchase on a store card
We have all been tempted by the idea of charging a big ticket item to a store card and taking advantage of the fact that there is no interest for a set period of time. This is a good idea in theory except that when you carry a balance that isn't paid down it can affect your credit score. This is especially true if the charge to the store card is near the card's limit. It takes a toll on your debt ratio. This can also be a bad idea because after the promotional period you are going to be hit with some very high interest rates.

2. Ignoring a traffic violation ticket

No matter where you are when you get a parking or speeding ticket and not matter how much the ticket is for it is important to pay it. If you leave a ticket unpaid the government will eventually report you to their collection agency. Anything that goes to collections will damage your credit score. The same goes for medical bills or rent that goes unpaid. According to Yahoo! Finance, even if you pay the bill after it goes to collections, it will stay on your credit report for 7 years.

3. The more cards the merrier
Credit cards are tempting. They may offer you a discount on your purchase for opening a new card or a great cash back opportunity. But ultimately filling your wallet with numerous credit cards is a big mistake. Opening a lot of new cards in a short time period is not good for your credit score. There is a benefit to the expanded credit limits however that will not kick in right away and will first hurt your credit score.

4. Taking advantage of a balance transfer to a new card
Your credit score is all about your debt to credit ratio. This means that taking the balance from one card and transferring it to another is not a good plan if the card your are opening has a smaller credit limit. It is smarter to keep a card open that you do not use because it increases the available credit that you have thus increasing your credit score. If the interest rate is better on the new card then do the transfer but keep the other card open so that the available credit is reported on your score. Your score will also lose a couple points when you apply for the new card so make sure it's a good decision. 

Chicago bankruptcy lawyers will encourage you to work to improve your credit score but also to avoid actions that will decrease it. Avoiding these four things will prevent you losing points on your credit score. Combining these actions with the tips to increase your credit score will help you reach credit score success.

Chang and Carlin
The content found on the Chang & Carlin site is not legal advice and is purely for informational purposes. The information contained herein is not a substitute for the advice of an attorney and does not create an attorney-client relationship. If you are interested in obtaining information about chapter 7 bankruptcy, chapter 13 bankruptcy, foreclosure services, real estate legal services, you are encouraged to call our law firm at 866-790-8601 Request a Free Legal Evaluation. Chang and Carlin serves clients in Chicago, Schaumburg, Joliet, Warrenville, Waukegan, Illinois.