Some credit mistakes are obvious. For example, if an Illinois consumer stops making car payments long enough for their vehicle to get repossessed, the resulting credit score drop shouldn’t come as a surprise. However, consumers in Illinois often make accidental credit mistakes that lead to lower credit scores and loan denials. Unfortunately, they may not realize the impact of their actions on their credit health until the damage is already done. This is why it is important for all consumers to understand how creditors and lenders view credit behavior. Then, by avoiding certain actions, they can protect – or build – their credit scores and avoid future loan and credit denials.
How These Common Credit Mistakes Have a Negative Impact on Credit Scores and Credit Approval Odds in Illinois
Here are the most common credit mistakes made by Illinois consumers. Typically, individuals who commit these errors do so with no intention of damaging their credit. They simply don’t understand how lender thinking influences credit score calculation.
Applying for multiple loans or credit cards at once.
You may want to shop loans or credit cards for the best deals. Or, maybe you have a low credit score, and you think that applying with multiple lenders will improve your approval odds. Yet, either way, this is usually a bad tactic. Every time Illinois consumers apply for a loan or credit card, it creates a hard inquiry on their credit reports that costs credit score points.
Plus, submitting a lot of loan or credit card applications within a short period of time makes you seem desperate for credit. Lenders may see this as a sign of financial distress, and perceive you as a lending risk.
Using too much available credit.
Of all possible credit mistakes, this is possibly the one committed most frequently by consumers in Illinois and throughout the country. It’s also easy to see why so many people overuse their credit. After all, if you have a credit card with a spending limit of $1,000, it seems logical that you can spend $1,000. Then, as long as you make your payments on time, everything is fine.
However, lenders don’t see it that way. In the eyes of lenders and creditors, using too much of your available credit indicates dependence on credit. This is why Illinois consumers who use more than 30% of their credit card spending limits often see their credit scores drop even if they are current with their payments.
Having multiple subprime loans on credit reports.
This one is tough to navigate because consumers in Illinois who want better credit should have a mix of credit cards and installment loans on their credit reports. Yet, future lenders and creditors notice when consumers make heavy use of subprime loans. Lenders that offer these loans target consumers with low credit scores, so they are easier to get. Subprime loans also come with high interest rates, lower monthly payments, and (sometimes) longer terms.
Because subprime loans usually come with less than ideal conditions, future lenders may hold your use of them against you. Their thinking is that you took out these loans because of extreme financial distress, and they may categorize you as a risky borrower.
Canceling credit card accounts in good standing.
Often, Illinois credit users find that they simply don’t use certain credit cards anymore. Maybe they’ve moved on to cards with better rewards and/lower interest rates. So, they close these unwanted credit card accounts. Unfortunately, this seemingly innocent act may cost them credit score points. The truth is that older accounts in good standing add length to your credit history. Dropping these accounts also reduces the amount of your available credit and raises your utilization rate.
Failing to regularly check credit reports for errors.
Here is a very disturbing fact for every consumer in Illinois with credit reports: 80% of all credit reports are flawed in some way. Creditors and the credit bureaus make mistakes which lead to credit report errors, and many of these inaccuracies bring down credit scores. Luckily, the Fair Credit Reporting Act (FCRA) entitles Illinois consumers to error-free credit reports. Yet, you have to find credit score damaging mistakes before you can have them removed.
This is why all Illinois residents should check their credit reports at least once every 12 months. The Fair and Accurate Credit Transactions Act (FACTA) permits you to request free copies of your credit reports annually from TransUnion, Equifax, and TransUnion. Just visit www.annualcreditreport.com to get all three credit reports from one secure and federally authorized website.
Then, while looking over your credit reports, if you spot errors and mistakes, contact Credit Repair Lawyers of America in Illinois. Our firm offers legal and FREE credit repair services so you don’t have to attempt disputing credit report inaccuracies on your own. Instead, an experienced credit attorney will do whatever it takes to get you clean credit reports without charging you anything out of pocket.
The Free and Legal Way to Get Better Credit
Don’t let errors on your credit reports bring your credit score down. At Credit Repair Lawyers of America, we’ve been cleaning up credit reports for consumers since 2008 for free. How do we do it? All of our fees come from the defendants in settled cases. This is why our clients pay nothing for the work we do.
Let’s start the conversation about what we can do for your credit. Set up your free consultation today by calling Attorney Gary Nitzkin at (855) 956-2089 or sending him a message through our contact page.
For more information about Free Credit Repair, please visit https://creditrepairlawyersam.com/illinois/credit-repair/.