5 Common Credit Mistakes You Could Be Making

How Could You Be Hurting Your Credit?

The more you know about how credit works, the better your score will be. This is because, without a lot of background knowledge, your own logic and reasoning will oftentimes fail you. There are a lot of factors that go into creating your credit score, so trying to make decisions when it comes to your credit without studying up first can be tricky. There are five big mistakes a lot of consumers often make because, without any background knowledge, they all sound perfectly reasonable.

1. Close A Credit Card

Just because you don’t really use your card does not mean you should close it. A lot of the time consumers will close a credit card because it is not getting used, but that actually will raise your credit utilization ratio, and thus hurt your credit score. So, keeping the card open, even if you rarely use it, can be beneficial. Make sure you use it at least every once and a while though in order to protect yourself from the card issuer closing the account for you due to inactivity.

2.Believing that Paying on Time is All You Need for A Good Credit Score

Yes, paying off all your credit card debt on time is good for your credit score, but that is not all it takes to have what is considered a quality credit score. If you are using a huge portion of your credit limit every month, even paying it off completely and on time will not be as beneficial as lowering your credit utilization ratio would be. Your credit utilization ratio is one of the biggest factors that goes into creating your credit score, and the lower is it, the better your credit will be. So, keeping your utilization ratio under 30 percent per credit limit will benefit you even more when it comes to your credit.


3. Pay Off A Loan Early


It definitely can benefit your finances to pay a loan off early, especially if you are paying a very high interest rate on the loan, but this can also hurt your credit score. It would be very easy to think that paying a loan off early would help your credit, but in reality, it lowers your credit mix and therefore lowers your credit score. So, if the interest rate on your loan is not burdening you financially, then you will actually benefit from not paying a loan off early.

4. Reject Higher Credit Limits

The only reason you should reject a higher credit limit is if you know you will not be able to stop yourself from overspending because of it. Otherwise, keeping your spending at a consistent rate while also increasing your credit limit will raise your credit score because your credit utilization ratio would then be lower. So, accepting a higher credit limit will in most cases raise your credit score if you can keep yourself from overspending.


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5. Send in Partial Payments

Paying off a debt partially does not put you in better standing with the debt collectors or the credit bureaus. You will still be reported as paying late and are at risk for a delinquency on your credit report. So, if you are struggling to pay your minimums every payment cycle, talk to a credit counselor before trying to appease the creditor by only paying partially.

Other Factors Causing A Drop
  1. Late payments
  2. High Balances
  3. Too many Inquiries
  4. Late reporting (possibly your credit cards reporting at different times to the credit bureaus. An easy fix to this is call your credit card and ask them when they report to the bureaus so you know when to make payments so your score reflects better)
  5. Paying an old collection (there is less than a 2% difference whether a collection is paid or unpaid, most weight is given to how recent the activity)

Do you have questions about your credit report? If you would like to speak with one of our attorneys or credit advisors  and complete a free consultation please give us a call at 1-800-994-3070 we would be happy to help.

If you are hoping to dispute and work on your credit report on your own, here is a link that provides you with a few ideas on how to go about DIY Credit Repair.

Road to good credit

The Road Map to Better Credit

Time to Pass Go: 

How to Establish a Good Credit Score


Whether it’s finding a home for your growing family, financing your dream car, entering a career or even attempting to acquire a decent rate on car insurance, everything in our lives revolves around credit. No matter what you do, someone is going to be viewing your past choices to asses if you are a liability in your future endeavors and they could be the deciding factor in whether you are living your life or just surviving.  I’m not saying this to scare everyone or say that without good credit you can’t live the life you are meant to live, but that acquiring good credit could provide opportunities that may seem out of reach!

So, I guess its time to get a credit card and start building my credit! Before we get overzealous with the power we have been given with this seemingly divine piece of plastic, let’s take a look into a few ways to reliably start building and maintain our credit.


Good Credit Starts with Good Financial Habits

Many people are trapped in credit purgatory, looking for debt consolidators that can act as magical credit faeries to reset their credit scores after they have fallen behind on payments. If you can’t establish good financial management habits, then the attempt to establish better credit will be futile. When building a house, you must start with a strong foundation and the same goes for credit. Some great financial habits that can help you improve your creditworthiness are:

  1. Record every transaction. I know it seems like a pain to keep everything logged, but in the end, you can observe how much you spend down to the last cent. If you wait to record your transactions, you may lose details along the way.
  2. Round up expenses. Say you go out to eat and your bill comes up to $24.14, you should list the transaction as $25.
  3. Round down income. When recording your transactions, you should round down your income. If you got paid $483.23 for the week, round it down to $483.00. This way you’ll have a few extra bucks when you balance your accounts. If your hard-core round down to $480.00 to save a little more and build the habit!

Start with a Secured Credit Card

Now that you have a good record of your finances, you can show your bank that you have a stable income and can responsibly manage your finances. This puts you in a better position to apply for a secured credit card and shows that you are low risk.

When you acquire your secured card, the bank will require you to deposit the limit of the card into an account. So, if the discussed limit of your card is $500, then you will deposit $500 into the secured account. When you make a purchase with this, the $500 is not touched (unlike a debit card that allows you to withdraw the money in your account). The purpose of the money you deposited in the secured account is to provide collateral if you default on paying off your balance.


Pay it Off on Time

Now that you have your secured credit card and you have made a few purchases with it, make sure that you have your balances paid off on time each month. The credit card companies make money from the interest charged for late payments and we are trying to establish and raise our credit!

Since you are beginning to establish credit, your interest rates are going to be pretty high compared to someone with established, good credit. In the end would you rather pay the final $20 that was left on the account, or $200 after the absurd interest rates? Some credit companies could also charge you a late fee or reduce your limit if you fail to pay your balance in full when it’s due!


Don’t Use Your Credit for Emergencies

Now, an emergency is classified differently among different people. Some classify an emergency as not having gas left in the car a few days before pay day and they are running on empty. Others classify an emergency as a new plasma screen TV going on sale at their local department store and the sale ends before payday. Learn to use your credit card for when it would be more stressful to pay with cash, don’t have an ATM around and can’t pull out cash or small day to day transactions. If you use your credit card for just “emergencies” you may find yourself slipping into a situation where everything is an emergency and spur of the moment purchases will become more frequent. Not having an 80-inch plasma TV to watch “Stranger Things” on is not an emergency!


Strive to be Creditworthy

Credit cards can have quite a lot of perks and pros associated with them; however, it could send you into bankruptcy if you aren’t vigilant in how you handle them. Once you have acquired a good credit score it may be tempting to open many additional cards because it’s easy for banks to lend to you now.  You should strive to be credit worthy and push on till your financial freedom. If you are credit worthy, you’ll have a good credit score and can enjoy your transactions and purchases without having to pull out your journal to log everything. Just like working out to get fit or building your career for a future, establishing and maintain good credit does not happen overnight, but in the end will help you achieve the life you know you are meant to live!


Author- Joe Peters

Do you have questions about your credit report? If you would like to speak with one of our attorneys or credit advisors  and complete a free consultation please give us a call at 1-800-994-3070 we would be happy to help.

If you are hoping to dispute and work on your credit report on your own, here is a link that provides you with a few ideas on how to go about DIY Credit Repair.

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Understanding Your Credit Card

Making the most of your credit cards

Credit cards are one of the easiest and most accessible ways to build credit , but can a detriment  to your finances if you don’t know how to utilize them properly. If utilized incorrectly, you could find your self  with extraordinary amounts of debt, a low credit score and even miss out in extremely beneficial opportunities! Today we will go over how exactly credit cards operate and provide the knowledge you need to avoid common mistakes!

1. How a credit card works

When you purchase anything with credit, you’re not paying for it right away. Your credit card issuer pays for the item and then sends you a bill for the purchases that you have made during the billing cycle. Once you receive the bill, you begin making payments towards paying off the debt owed. You can only charge up to the provided credit limit and must pay down the amount to make further purchases.

There is normally a  grace period of at least 20 days beginning at the end of the billing cycle. If you pay your credit card bill in full before the grace period ends then you  won’t have to worry about your cards APR! If something happens and you are unable to pay the full amount of the bill, the remaining  amount will accrue interest. Most credit cards have fairly high interest rates and in some cases, can reach over 30%!  This interest will causes your balance to increase faster and will make paying off your debt much more strenuous! The more purchases made, along with the looming interest,  is the reason many slip into debt!

Your credit card statement will list a minimum payment that you you must make for that month. If you fail to pay this minimum payment (you can always pay more than the minimum) by the end of the month, then the borrower will consider this a late payment. This late payment will not only further affect your APR, but will also be reported to your credit report, potentially harming your score.

At this point a debt is owed and if not properly taken care of, can be transferred to collections or be bought by a debt collector. This will damage your credit report even further and about 7 years to fall off the report if not handled.

2. How you’re going to pay back what you owe

It is essential that you always pay your credit card bill in full every month so you do not need to worry about interest rates or the threat of a late payment. Regulate how much you’re spending and don’t charge more than you can  comfortably afford to pay back if you can help it. A good rule of thumb is to keep your credit utilization as low as possible (preferably below a 30% utilization rate). This means that if you have a cap of $1000 on your credit care, you want to try to keep the balance below $300 if possible!

For those out there that  have  accrued credit card debt, you should make a plan to pay back what is owed as soon as possible! Though this process can take a few months or even a few years, it is important to eliminate the debt as fast as possible!  First, make a list of all the cards that are currently carrying  a balance, noting their interest rates, balances, and minimum payments. Put those cards in order, starting with the card with the highest interest rate and amount owed. Make your minimum payment on all of your cards and put any remaining  money on the card with the highest interest rate until the card has been fully paid. After that, move to the  next card with the next-highest interest rate and continue the process

There are many other ways to address credit card debts such as debt negotiation, payments plans and so on. This is a story for a different blog and each option has its pros and cons to cleaning up your debt.

3. How to keep your credit card information safe

Sadly, credit cards are a prime target for identity thieves , who look to use  stolen card info to make as many purchases as possible without your knowledge. Most companies are pretty vigilant when it comes to notifying  you of suspicious activities or locking the account! It is important to keep an eye on your report and your spending so that you can cancel your card as quickly as possible when identity theft occurs.  Keep your information secured, do not purchase from unsecured sites or give your information to a non accredited source.

We are a society of technically advanced individuals and have data for almost every aspect of our personal life. In some cases, data breaches can occur and a mass amount of information becomes available to an unsavory crowd. Many times, these businesses will catch the breach, but some may find it too late. This is why it is important to know where you can access your spending reports and take steps to mitigate the outcome of a breach.

Check your credit card statements monthly for any charges you don’t recognize and notify your card issuer immediately upon their discovery . You will want to change your passwords to personal accounts or add secondary security measures such as SMS codes or external validation upon login.

You want your credit card history to be beneficial  to you, not a burden, so be diligent when using your card. If you  spend only what you can afford to pay back, secure and protect your credit card information carefully, and always pay your bill on time, you will reap the benefits and not have to worry about the consequences associated with mismanagement!


If you have been affected by identity theft or credit card debt, call Credit Law Center at 1-800-994-3070 for information and assistance with your report!

For more information on Credit Law Center and Credit Repair,  find us at https://www.creditlawcenter.com/credit-repair/

Article written by Joe Peters


Making The Most Of Your Month: Cleaning Up Your Credit

Leaving Credit Card Debt Behind

Credit Card debt is increasing for many American families. According to Experian, most family units with a bank card that consists of over $6,000 in debt. For many, this debt can be hard to manage! Do you keep asking yourself why your debts continue to pile up with little to no headway made month to month? 

One can only crunch numbers so many times over again. You may find that the numbers are rarely moving and potentially increasing without using the cards. Read more on 3 tips to help you get out of debt and manipulate your finances to make the most impact.

  1. Consider Your Budget

Start with being honest with yourself about spending. What can you cut back on the short term? Have you looked at how much you are nickel and diming yourself? It may come as a shock what you find is left over after you cut random spending out.  

List out all of your debts, balances, monthly funds, and due dates. Move money around that is strictly for bills only and the deadlines you have for each. Now, what is left? Is there any wiggle room? Decide what is most important next. 

If you enjoy apps on your phone, Mint now has a great updated app that tells you where you ended up overspending for the month. 

A great rule of thumb is to tackle the lowest credit card first and make a larger lump sum on your payment so that one gets paid down quickly. Once you see one balance start to deplete, the other cards may seem more manageable.  While the funds you had for “other” activities may be small, the thought of not having a cloud of debt following you around is much better!

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  1. Seasonal Job Searching

Also known as the side hustle. Although making a few extra hundred dollars a month may not seem like a lot when you are giving up your free time on evenings or weekends, having a seasonal job that is strict to work to pay the debt off quicker is absolutely worth it. When you have set yourself up on a tight budget and you start working a side job, the money will be a tool to accomplish your goals faster.

Don’t Cut Out all the Fun!

Paying bills is never the fun option however, the freedom from debt will be worth it in the end. If you have found after combing through your finances that you were spending way too much money at the movies or out to lunch, cut back enough to save but try not to completely eliminate everything you do. You may find if you allow for no fun, the budgeting will become harder for you and you will ditch the process in order to continue to live the life you were living. Moderation at this point in the process is key!

  1. Debt Consolidation or Debt Negotiation

You may find terms on the internet about debt consolidation or debt negotiation. There are many companies out there that can do one but not the other. Conduct plenty of research before getting into a company that is for debt consolidation vs debt negotiation. 

Debt consolidation typically means you’re actually incurring more debt. The fact is, debt consolidation does not mean debt elimination. These companies are actually just restructuring the debt rather than wiping it away for you. 

If you are wanting to get rid of debt, the quickest way to do so is to delete the items. 

The flip side of this is debt negotiation. Credit Law Center has attorneys on staff that can help you through this process. This is where eliminating debt actually takes place! Negotiating debts down with the creditors you owe help you attain your goals more quickly than debt consolidation will. Remember that never-ending cycle of debt? It will just continue with debt consolidation. But, with debt negotiation, the end may be near!

Following any of these three options listed is a sure-fire way to start knocking down debt and potentially increasing your credit scores. 30% of your credit score is made up of the utilization on your credit cards. Therefore, if you have several accounts that are maxed out, you probably noticed your credit scores are significantly lower than they could be. In all reality, credit plays a major role in our day to day lives. If you find that you are in a place that you need financial or legal advice, please give Credit Law Center a call today 1-800-994-3070.

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