- March 20, 2017
- Posted by: Alyssa Plumb
- Category: Blog
Popular San Francisco credit tips to ignore
There is a lot of information out there about how to improve your credit, but much of it is inaccurate. Here are four San Francisco credit tips you’ve probably hear about that are completely wrong and might actually make things worse.
Lowering your credit limit
Many people recommend that lowering the amount of credit you have available to you, such as getting a lower available balance on your credit card, will help your credit. They say this is the case because it keeps you from borrowing more than you can afford to pay back.
While it is true that it will help keep you from borrowing too much, the truth is that the credit agencies want to see that you have a lot of credit available to you and that you are only utilizing a small portion of it. Try to spend less than 10% of what you are allowed on your credit cards, which is a lot easier to do if you have a higher credit limit.
Paying off debt sooner
Another big recommendation is that you pay off your debts such as personal loans earlier because it will help you get out of debt. Is another one of the San Francisco credit tips that won’t actually help you. The problem is that credit agencies want to see that you have handles credit for years and still been able to manage it just fine. So it might actually hurt you to pay off your debt early because it lowers your length of account history.
Get a lot of credit at once
Many people think that you should apply for a bunch of credit cards and personal loans all at once because you need to have credit on your report to increase your score. The problem is that every time someone checks your credit to give you a loan or credit card, it shows up on your credit report. Future lenders will see you borrowing a lot of money all at once and think it is too risky, so your credit score goes down.
Doing a debt settlement
Some people will tell you that you should settle your debts to get them all paid off quickly. The problem is that a debt settlement is reported to the credit agencies, and the fact that you paid less than you agreed to pay back looks bad to lenders. It will drop your score again. Pay off debts in full whenever you can.