What NOT to Do to Increase Credit Score
You have probably heard some good sounding advice about ways to increase credit score without having the money to pay down any of your debt at the moment. The key there is that is sounds good. Heck, we even have an article on the subject: How to Improve Your Credit Rating Without Paying Down a Dime of Debt (catchy title - eh?). Only, the advice in that article actually is sound.
But as with stock tips, everyone's got ideas on ways to increase credit score and most of them aren't any good at all; what's more, many people's advice on how to help you increase credit score can hurt you. Suddenly, in your efforts to increase credit score, you could find that you wind up unwittingly lowering it.
So we've taken it upon ourselves to sort the helpful from the harmful, the ways to increase credit score from the ways that actually decrease it. The result is this partial list we've compiled of the most misguided, counterproductive, potentially harmful actions you can take to increase credit score that, pretty much invariably, won't.
Remember as you read the following that this is a list of DON'TS:
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Don't close unused credit cards as a strategy to increase credit score in the short-term. For one, you run the risk of lowering your average length of credit history which would lower your credit, plus your debt-to-credit limit ratio will suffer, and as a result your credit score will too.
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Don't open one or more new credit cards just to show that you have more available credit.
Well, now your debt-to-credit limit ratio will improve, sure, but this "strategy" can quickly backfire, as you'll have more credit cards to your name and you'll have a lower average length of credit history which, combined, will lower your score (not increase credit score) more than the extra available credit increased it.
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Spread out your search for credit so your credit report doesn't get too many 'dings'.
On the contrary, whenever you have multiple inquiries of your credit report and score within a 14-day period, it is assumed that you were shopping for a single loan, and therefore you are not penalized for the multiple inquiries. If you spread it out, however, it will look like you were shopping for multiple loans and, again, rather than increase credit score, this will lower it.
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Close accounts to disguise poor credit behavior from your past.
Closing accounts may not increase credit score if it decreases your available credit and/or shortens your length of credit history; regardless of whether you decrease or increase credit score with such an action, the information regarding closed accounts (including late payments, defaults, etc.) stay on your credit report anyway.
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Exercise your right to add a 100-word 'Consumer Statement' to your report explaining the circumstances around certain negatives on your credit report.
This usually does more harm than good; don't admit bad behavior, just start improving your credit behavior now, in time it will get onto your credit report and increase credit score.
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Accept pre-approved credit card offers because they've presumably already checked your credit report and score before pre-approving you. In reality, all they've done is a 'soft' search, which doesn't affect your credit score, but if you actually accept the pre-approved offer, they must do a 'hard' search in order to approve you, and this will show up on your credit report whether you get the card or not, and will lower rather than increase credit score.
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Avoid credit counseling because repaying debts through an agency shows up negatively on your credit report.
Sure, but that's only part of the picture; paying off debt one way or another looks way better overall than not doing it at all just because using the services of a credit counselor is frowned upon.
There is plenty of good, sound advice out there (particularly on this website) on how to increase credit score and NONE of it is contained in the tips above. Ways to increase your credit score are a dime a dozen; ways that actually work are priceless. Be sure that you don't unwittingly sabotage yourself in your efforts to increase credit score.
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