The Five Top Credit Mistakes

With the recent tightening of credit requirements by lenders, these pointers from Credit CRM might be helpful:

Credit Mistake #1: Closing Credit Cards Accounts
This is probably THE biggest credit mistake that consumers make. What you may find surprising is that closing credit card accounts can hurt your credit score almost as badly as missing a payment. Consumers make this mistake based on poor advice from a mortgage lender as a strategy for improving their credit scores.
In most cases, credit information will remain in your credit reports for seven years from the account's date of last activity, but you never want to get rid of old, positive information in your credit reports. This information actually helps your credit scores. So, what should you do with old credit cards that you don't use any longer? What you don't want to do is to let the account become inactive. Use the card every few months for low dollar purchases like dinner or a tank of gas....then pay the bill in full.
Credit Mistake #2: Missing Payments
This one's a no-brainer. Your FICO score evaluates previous late payments in three different layers: How severe, How recent, and How frequent
Credit Mistake #3: Settling Accounts
"Settling" is a term used in the consumer credit industry that means accepting less than the amount you owe on an account. A Short Sale, when the lender accepts less than the full amount due on a mortgage is an example of this. The only way to avoid the damage to your credit scores is to arrange a deal with the lender to report the account as 'paid in full' as opposed to 'settled'.
Credit Mistake #4: High Revolving Utilization on Your Credit Cards
Most consumers believe that making your payments on time is all it takes to have good credit and earn great credit scores. What they don't realize is that almost a third of your score is determined by how much you owe on your credit card accounts. In order to score the most possible points in this category, they advise keeping your revolving utilization at 10% or less.
Credit Mistake #5: Excessively Applying for Credit
Whenever you apply for credit your application gives the lender permission to access your credit reports. Statistics show that consumers who have more inquiries are higher credit risks than those with fewer inquiries. It is for this reason that the more inquiries you have, the more points you lose in the credit score calculation.
Only apply for credit when you absolutely need to, and avoid those in store offers of "10% off" in exchange for applying for a store credit card. This may sound like a great idea but the reality is that while you may save a few dollars on your purchase, those inquiries could end up costing you a lower credit score which could result in higher interest rates on auto or mortgage loans in the future.