If you’re looking to improve your credit score, you might be desperate to find tricks for adding a few extra points. But because it’s hard to grasp what factors into a credit score and what doesn’t, determining what’s best for your credit isn’t always easy.
You should be careful when trying anything to build better credit, especially since some strategies might actually lower your score. Here are some tactics you may have heard that won’t actually work for improving your credit score.
1. Avoiding your score
Checking your own credit score won’t lower it. Why? It’s the difference between a “soft” and a “hard” inquiry, with your own check falling into the former category. Soft inquiries don’t show up on your credit. But when you apply for a loan or a new credit card, a hard inquiry is recorded and can affect your credit score.
Instead of avoiding your credit score thinking that you’re helping yourself, use your score to help build better credit.
2. Paying off delinquencies
Paying off delinquencies won’t improve your credit. That’s because once they’re reported, the record will stay there for seven years whether you’ve paid off the balance or not.
The exception to this may be if you’re dealing with collection agencies, where you can sometimes negotiate what’s reported to the credit bureaus. But this doesn’t always happen, so expect the worst when paying off accounts in collections.
3. Using a credit repair company to wipe away negatives
Credit repair scams often make big promises with little in real results.
According to the FTC, some of the advice like creating a new identity or disputing all the information on your credit report is illegal and constitutes fraud. Not only will these strategies not work, but you might be stuck paying out-of-pocket fees up front.
If you’re disputing actual mistakes on your credit report, take action on your own instead of paying for help.
Be careful about hiring anyone to repair your credit, and be sure to check that their suggestions are effective and legal ways of sprucing up your credit.
4. Opting out of credit card offers
While you may hate getting credit card offers in the mail, banning them won’t give your credit score a boost.
Just like with checking your own credit score, these credit offers are considered soft inquiries, too, meaning they won’t be found on your credit report. Consider opting out to reduce ID theft or to get less mail, but don’t think you’re doing your credit score a favor.
5. Closing credit accounts
Canceling credit cards after you’ve paid them off won’t help your credit score, and doing this could actually make your credit worse.
If you carry a balance on your cards, closing a card reduces the amount of credit that’s available to you. When you’re available credit decreases but your balances remain the same, you’re increasing your credit utilization. Higher credit utilization typically has a negative effect of your credit score.
Closing a credit card also negatively affect your credit history length. Although the card will stay on your credit report for 10 years, you could see a credit score drop when the closed account falls off your record later.
6. Any negatives will kill your score
It might not be what’s on your credit score that matters most but how recently the event happened. More recent entries, especially ones that occurred within a year, are given greater weight than ones from years ago. Because of this, it’s imperative that you focus on building good habits now rather than worrying about mistakes you made in the past.
7. Paying before due date
Paying your bill before the due date won’t help your credit score. Once the statement has been issued, the balance owed has already been reported.
The exception here is if you make payments before the statement comes out. You’ll have a lower balance and utilization reported, which could help your credit score.
8. Opening more accounts
Opening accounts can have a positive effect on your credit, but opening too many will likely do the opposite. When you open too many credit cards at once, your behavior might look risky. This behavior makes you look desperate to get access to credit, and your credit score will drop to reflect this.
Of course, having several accounts in good standing can boost many aspects of your credit account. Just open new accounts gradually instead of many new credit card accounts at once.
9. Maintaining a balance on credit cards
Running a balance on your credit cards doesn’t enhance your credit in any way. Just like trying to pay your bill early, the statement balance is reported when the billing period closes. No information is reported until your next bill, meaning the interest paid doesn’t do a thing to help your credit.
If you’re trying this tactic, you’re likely paying extra in interest that isn’t needed when you could be reaping the same credit benefits if you simply paid your entire bill.