I previously gave you 5 mistakes to avoid with your credit. So as people are ramping up their holiday shopping, I thought I would share with you 5 more mistakes to avoid with your credit. The difference between good credit and bad credit can be thousands of dollars. So here are 5 more mistakes to avoid with your credit:
1. Requesting a credit limit reduction. You may believe that you have too much credit and that you are better off with a credit limit reduction for existing credit cards. In fact, the only significant effect a limit reduction has on your credit score is a negative effect on your debt ratio.
2. Utilizing the first credit counseling service you hear about. Most credit counseling services cannot advise you all of your options, such as bankruptcy. And, quite often, the ones that advertise the most are the ones that you should avoid. Use the FTC’s advice (http://www.ftc.gov/bcp/conline/pubs/credit/fiscal.htm) and find a reputable credit counseling service in your area. If you are going to use one, call several of them and ask the questions from the FTC page to find ones that seem legitimate, then check with the Better Business Bureau before moving forward. Then call an attorney to find out the rest of your rights before you hire anyone!
3. Declaring bankruptcy too quickly. Many people go forward with bankruptcy because they believe it is the only way out. Instead of taking such a drastic measure, seek counseling first and make sure to consider all of your options, including negotiations with your creditors.
4. Practicing credit card arbitrage. This can seriously damage your credit score if you do not know what you are doing. Stay away unless you know exactly what you are doing. One mistake and your credit score could easily be demolished.
5. Never checking your credit report. Most people who behave well with their credit just assume that their credit is fine, but sometimes incorrect things can show up on your report. Visit http://www.annualcreditreport.com/ to get a free report once per year. You may catch mistakes or even identity theft.
The best thing you can do is to take ownership of your credit. Avoiding these mistakes can save you hundreds, if not thousands, of dollars. It will also make your life so much less stressful!