Improve Credit Report - Avoid These Two Mistakes When Working on Credit
We sometimes try to improve a credit report by taking steps to clear debt out. I know, it happened to me! I was working on improving my credit report when I decided to pay off some accounts. Unfortunately at that time I knew very little about credit and had no idea what I was doing was causing more damage than improvement to my credit.
When I reviewed my report I found what I expected. A cell phone collection for a phone company that had screwed me recently. You know how they pull the "you have 30 days to try it out and if you don't like it you can cancel." When you try to cancel they show you the fine print stating you can only talk certain amount of total hours on the phone. If you go over those hours, you can no longer cancel without penalty. Well that's what I had. Hopefully none of you have had this happened. Anyway, they got me for the usual $175 dollars. I also had a little money left from filing my taxes and I wanted to use it to eliminate my debt.
Here's what I did, thinking it would improve my credit report.
For the cell phone collection, I paid it off, in full. By the time I paid it, it was a good year and a half after it had happened. My fico wasn't terrible but I wanted to improve it. I paid it thinking it would improve my credit report. Well what it did was bring the debt current again. I didn't know that paying it would bring it back and all its damaging effect on my score. All the time that passed by had reduced its damage on my report but I didn't know this. I figured I'm paying bad debt off and was expecting for my credit score to improve. No luck. Unfortunately I found this out after the fact.
On the other accounts I had, which at that time were 5 credit cards. I decided that it was crazy for me to be paying the yearly fee on my two oldest cards. I paid them off and closed them. After all, I had recently applied and been accepted to two other cards that had no yearly fee and lower interest rates. Again, thinking this move would improve my credit report I closed them. My credit dropped so drastically that I couldn't understand what was going on. Apparently, I cut years of credit history and not to mention reduced my total available credit. Two very bad things in the credit game!
Finally to improve my credit report, I resorted to getting educated. At this time I was looking more for credit repair than a way to improve my credit report. I couldn't understand what was happening and needed to get a handle on the situation as soon as possible. I looked at a few online options and that's when I figured out all the damage I had caused. Now I know better and think how silly and an opposite effect this has on ones credit. One thing for sure, you either play by the rules or you lose the game.
When I reviewed my report I found what I expected. A cell phone collection for a phone company that had screwed me recently. You know how they pull the "you have 30 days to try it out and if you don't like it you can cancel." When you try to cancel they show you the fine print stating you can only talk certain amount of total hours on the phone. If you go over those hours, you can no longer cancel without penalty. Well that's what I had. Hopefully none of you have had this happened. Anyway, they got me for the usual $175 dollars. I also had a little money left from filing my taxes and I wanted to use it to eliminate my debt.
Here's what I did, thinking it would improve my credit report.
For the cell phone collection, I paid it off, in full. By the time I paid it, it was a good year and a half after it had happened. My fico wasn't terrible but I wanted to improve it. I paid it thinking it would improve my credit report. Well what it did was bring the debt current again. I didn't know that paying it would bring it back and all its damaging effect on my score. All the time that passed by had reduced its damage on my report but I didn't know this. I figured I'm paying bad debt off and was expecting for my credit score to improve. No luck. Unfortunately I found this out after the fact.
On the other accounts I had, which at that time were 5 credit cards. I decided that it was crazy for me to be paying the yearly fee on my two oldest cards. I paid them off and closed them. After all, I had recently applied and been accepted to two other cards that had no yearly fee and lower interest rates. Again, thinking this move would improve my credit report I closed them. My credit dropped so drastically that I couldn't understand what was going on. Apparently, I cut years of credit history and not to mention reduced my total available credit. Two very bad things in the credit game!
Finally to improve my credit report, I resorted to getting educated. At this time I was looking more for credit repair than a way to improve my credit report. I couldn't understand what was happening and needed to get a handle on the situation as soon as possible. I looked at a few online options and that's when I figured out all the damage I had caused. Now I know better and think how silly and an opposite effect this has on ones credit. One thing for sure, you either play by the rules or you lose the game.
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