Welcome to professrsavings.com, we teach finance basics.
Today we will teach surprising things that lower your credit score
Hi I’m Rayfil Wong.
Professor Savings pays his payments on time on his mortgage so that he keeps a healthy credit score.
But there are a few surprising mistakes or NO NO’s that can hard your credit.
Let’s start. Professor Savings has used the same credit card for the past 15 years and has been paying the balance in full every month. He decided to get a new airline mileage plus credit cards so he can receive points.
Professor Savings likes to keep things simple so he cancels his first credit card.
The problem is that all those 15 years of positive credit score records have been deleted damaging credit.
Professor Savings a few months later get a letter stating that he has been approved for a new silver credit card. This time with lower interest and higher limit compared to his mileage plus credit card.
Professor Savings transfer his $2000 debt over to his new credit card to lower the interest.
His new silver credit card has a spending limit of $2200 but Professor Savings brings over $2000 in debt.
But, Professor Savings score has dropped again this time because the debt to limit ratios on his card is more that 50% which triggered a warning to the credit bureau.
Professor Savings discovered that it is best to keep the debt to limit ration under 30%.
The better strategy is to spread his debt of $2000 over a few cards instead.
Professor Savings has been gone to Europe for a business trip forgetting to pay his monthly cable fee and this can hurt his rating.
So pay your bills on time and if you can’t be sure to spread your debt over a few cards.