credit score

Credit Karma vs Quizzle: Which is Better for Free Credit Scores and Reports?

September 22, 2014 By Lori Kelley 16 Comments

Credit Karma and Quizzle: whihc is the better free credit score company?

There are so many websites out there that promise free credit scores and free credit reports. The problem is many of them walk the tightrope of being scams, and only a few of them tend to deliver on their promise. Credit Karma and Quizzle are two credit reporting websites that, for the most part, actually delivery on their promise of no cost credit scores and reports. While both deliver, they aren’t identical, and there are a few differences which exist between them.

What is Credit Karma?

Founded in 2008, Credit Karma is a website offering free credit and financial management services. The site provides free credit scores, free credit reports, and credit monitoring from TransUnion. When you visit this website, you can access your TransUnion credit score and reports at no cost. All the services offered at the site are completely free, and there is no need to pay or give your credit card to access any of their services. They are a legitimate site offering a solution to allowing you access to credit score and reporting.

What is Quizzle?

Just like Credit Karma, Quizzle was also launched back in 2008. Quizzle is also in the business of offering consumers information regarding their credit score and their credit standing at no cost. The site also doesn’t require a credit card or any other form of payment to access the services they provide. They are a legitimate company which offers consumers free access to their credit score and report.

What is the difference?

One can’t help but ask what are the differences between Credit Karma and Quizzle. The most significant difference between the two is the credit agency they use to create your score and report. Quizzle makes use of the credit agency Equifax, while Credit Karma makes use of the credit agency TransUnion. Since each of the three credit reporting agencies (Equifax, Transunion and Experian) are different, what their scores and reports contain can be different from the others.

Another difference between Credit Karma and Quizzle are the types of credit scores each provides. Of the two, Credit Karma offers consumers four scores (TransRisk Score, TransUnion Home Insurance Risk Score and TransUnion Auto Insurance Risk Score and VantageScore) while Quizzle only offers the VantageScore through Equifax. All these scores from both companies are FAKO scores.

Both companies also offer free credit reports, but again, these are from different credit reporting agencies. Consumers get their credit report from TransUnion when using Credit Karma, and it can be accessed as often as once a week. Consumers get a report from Equifax when using Quizzle, but can only have access to it every 6 months.

Of the two companies, Credit Karma is generally regarded as having the better combination of credit tools and access to the scores and reports, but a lot depends on the consumer’s individual needs. It also depends a lot on which credit bureau they want to see the information obtained from (Experian free credit score information can be found at Credit Sesame). While in general terms the two companies appear to be almost the same, there are some key differences which favor Credit Karma over Quizzle for many people.

Credit Karma Warns Shoppers Who Get Store Credit Cards for a Discount

July 7, 2014 By Jeffrey Strain 1 Comment

It wasn’t that long ago when retail stores would offer you a freebie to open up a credit card account. While this still happens, there has been a shift to retail outlets offering an immediate percentage discount off of a purchase to sign up for a credit card. With the second half of the year now upon us, chances are you’ll begin to hear the question more from cashiers about whether you would like to save a certain amount off your purchase (usually 10% – 30%) simply for applying for a store credit card.

It’s an effective strategy for the stores. In a survey commissioned earlier this year through Harris Interactive by Credit Karma, of the over 2,000 adults questioned, one out of every five people (21%) ended up opening at least one store credit card to get the discount offered. Nearly half of them (45%) didn’t consider the impact opening the store credit card might have on their credit score.

As Credit Karma founder Ken Lin noted, “Opening a store credit card can be beneficial if you regularly shop at that store. However, it can also negatively impact your future credit worthiness and your finances, which many Americans don’t think about. That’s when people get into trouble.”

Are these store credit card offers worth it? They can be, but only in specific circumstances. Here are a few things it’s important to remember if you’re offered a discount to apply for a store credit card:

Pay in Full: If you can’t pay off the store credit card in full each month, it’s not a deal no matter how much of a discount the retailer offers. Store credit card interest rates are some of the highest out there, and any savings you received will quickly disappear to interest charges. There is a reason the store is offering you the discount to sign up for the card. They know that in the long run, they will make money off of people who apply for them, not lose money.
It Will Affect Your Credit Score: Applying for a store credit card will affect your credit score. It can help long-term if you pay it off in full each month, but can hurt if you don’t. It might hurt your score short-term if you have recently applied for other credit as well.
It Shouldn’t Be an Impulse Sign-Up: Just as impulse purchases can hurt your finances, impulse store card sign-ups can hurt them in the same way. Signing up for a new form of credit shouldn’t be done on the spur of the moment. It should be something that you spend some time considering and analyzing to make sure it’s the best financial move for you to make. If you haven’t though it through, it’s best to pass until you have a chance to think it through. The same offer will likely still be available the next time you shop if it turns out it’s something which might benefit your finances.

Is Quizzle Free Credit Score a Scam or Legit?

March 25, 2014 By Lori Kelley 7 Comments

Many people have come to realize that your credit score can be quite important to save money when you are trying to get certain types of loans. A good credit score can mean paying thousands of dollars less in interest than a poor score. For this reason, many people want to keep an eye on their score when they are about to take out a home mortgage or get a car loan. Some people feel it’s important to keep an eye on the score to make sure that nothing unusual is taking place in their credit reports. Whatever the reason, more and more people are looking for ways to obtain free credit scores.

If you want to get your score directly from FICO, it’s going to cost you about $20. Seeing this as an opportunity, a number of websites have begun to offer free credit scores. These include the likes of Credit Karma and Credit Sesame. Another player in this field is Quizzle.

Since Quizzle is not as well-known as Credit Karma and Credit Sesame, the question often arises as to whether or not Quizzle is a scam? People also wonder if it’s a safe and secure website to use? In other words, is Quizzle a scam or a legit website where you can obtain a free credit score? The best way to determine this is to understand how their system works, and exactly what you’re getting when you enter your information into their website.

Quizzle works in basically the same way as both Credit Karma and Credit Sesame, but it uses a different credit reporting agency to generate its score. While Credit Karma uses Transunion data, and Credit Sesame uses Experian data, Quizzle uses data from the third of the main credit reporting agencies; Equifax. Since all three of these sites use data from the different credit reporting agencies, the score that they generate from their data will all be slightly different from one another.

An important factor to note is that Quizzle doesn’t force you to use a credit card as part of the sign-up process in order for you to obtain your free score. Instead of making their money by having you sign-up for credit monitoring services as part of the sign-up process, they are able to generate income by serving you advertisements and through lead generation. For example, while using their website you may get offers to sign up with a new credit card that has a lower interest rate than your current credit card. They may also provide offers to refinance your home at a better rate than you’re currently paying on your mortgage. If you happen to sign up with one of these offers, Quizzle will earn some money because they referred you to the business. This means that Quizzle is using a legitimate business model, and it’s not a scam. Although it is legit, it’s essential that you understand how the business works so that you don’t assume that you’re getting something that you’re not.

The main issue that you need to understand is that the Quizzle score you receive, even though it is based on Equifax data, isn’t your true FICO score. It’s what is often referred to as a FAKO score. What that essentially means is that it’s a score that’s generated by looking at many of the same elements that your true FICO uses, but since it isn’t coming from FICO, the score will not be exactly the same. The score could be slightly higher or lower than your true FICO score. Quizzle recently began using what is called a VantageScore version 3.0 to produce it’s results.

There is a specific reason why Quizzle uses VantageScore version 3.0 to generate a score rather than your true FICO score; it’s significantly less expensive to do so. If they were to give you your FICO score, the business model that they use to generate income wouldn’t work. The FICO score would be too expensive to make it work, so they opt for a score which is much less expensive for them to obtain, but it’s still based on many of the same criteria that go into creating your FICO score.

If the main reason that you want to see your credit score is so that you can track it from month-to-month to monitor if there are any substantial changes to it which may indicate that something has changed in your credit report, then the Quizzle score may be perfectly acceptable. In fact, one of the bonuses that they offer that their main competitors don’t is a free Equifax credit report twice a year in addition to the free score monthly. If, however, you are looking to take out a loan of some type, then you probably want to know what your FICO score is, and not an approximation of it.

Another important factor to keep in mind is that if you do use their site, you’re giving a third-party access to your sensitive financial information in order to get the free score. Any time that you give your financial information out to a third-party website, there is always the chance that there could be security breached, and your information may be exposed to those looking to commit fraud. This is especially important to consider because there are a number of ways that you can obtain a free credit report without giving your financial information to a third-party business.

The good news is that anyone wanting to use Quizzle doed’t have to be worried about it being some type of scam. The company is legitimate, and you’re able to obtain a credit score for free without major catches involved. They will generate a score that is an approximation of your FICO score, but it will likely be slightly higher or lower then your true score. In return, you will be offered advertisements and lead generations, and you must also be willing to give some of your personal financial information to Quizzle.

Cancelling Target Stolen Credit Card Shouldn’t Hurt Your Credit Score

December 19, 2013 By Jeffrey Strain 1 Comment

Anyone who has shopped at Target during the holiday season (November 29 through December 15, 2013) and used a credit card or debit card (including the Target Red Card) for the transaction has likely had their information compromised. There are a number of steps that should be taken to protect your accounts including cancelling your credit card and getting a new one. While this is definitely a huge inconvenience, there is a little bit of positive news for those who do cancel. Doing so shouldn’t hurt your credit score.

In many cases when you cancel a credit card, your credit score will take a hit. There are a couple of reasons for this. If the card that you cancel happens to be the one that you have had the longest, cancelling it shortens your credit history, which can lower the score. In addition, you lose the available credit on the credit card which can make it appear that your debt to credit limit ratio is higher. Again, this is a change that can hurt your credit score.

The good news is that when you close a credit card due to fraud or possible compromise, you’re usually able to avoid both of these scenarios. In these situations, when the account is closed the reason for the closure will be noted as lost, stolen or compromised with a new account immediately opened. They may also not close the account at all, but simply change the account number for the current account. When either of these options are done, all the history and information from the old account is transferred to the newly opened card. This means that the open date of the card remains the same. You should be able to keep your entire credit card history, and as long as the date the original credit card was opened doesn’t change, there should be no negative effect to your credit score.

In addition, the new card you are issued will have the same balance and credit limit as the original card. This means that the debt to available credit will, again, remain the same so as not to do any damage to your credit score. Thus, when it comes to your credit score, requesting a new credit card in this situation should not change your current score.

It’s important to note that if you do change your credit card, you won’t be able to use it for the holiday shopping season until the new card arrives. Most credit card issuers offer express delivery of new cards within a day, but you will need to pay a fee for this service.

It’s also crucial that you make sure to notify any merchants where you have automated payments set up on the card of this change, so that these transactions don’t get denied. While doing this may seem to be an inconvenience, it will be much less of one than if you have to do all this after unauthorized purchases have been made on your card.

Also note that due to your account being compromised, you can get a free credit report from each of the main credit reporting agencies (Equifax, Experian and TransUnion) to check to make sure that no unauthorized or fraudulent information is appearing on them.

(Photo courtesy of Kevin Dooley)

Money Management from A to Z

October 2, 2013 By Guest Writer Leave a Comment

By Jamie Englert

Managing your finances may seem like a dizzying mass of numbers. But you can also think of personal finance in terms of letters, as in the initials of some important personal finance terms to know. From bonds to life insurance to yield, below are some of the A to Z finance terms it’s worth knowing.

APR

The annual percentage rate is the actual rate you pay on money you borrow or the actual return you earn on money you invest calculated out over a year. This differs slightly from the interest rate. For example, with a mortgage, the APR includes fees you have to pay for the loan. With a credit card, the APR accounts for the fact that the interest may be compounded daily, which will lead to a slightly higher rate than simple interest.

Essentially, you want a higher APR for your bank accounts or money you lend but the lowest for your own credit products. Just a one point APR difference can mean thousands of dollars over the life of a long-term loan, such as a mortgage.

Bonds

Bonds are an investment that is essentially a loan to a company or government entity. Unlike stocks, bonds don’t give you an equity investment in a company; you instead get a promise to pay back your investment plus interest.

Bonds are usually less risky than stocks but their returns are also lower over the long-term. Cost is a heavier factor, with high-cost bonds poses more risk than lower cost vehicles. Examine your risk tolerance and current finances to decide whether you can weather a bond.

Credit score

Your credit score is essentially a numerical rating of how you manage the money you borrow. Lenders, landlords, insurance companies and even some employers use your credit score to assess the risk of doing business with you. Check your credit score annually and dispute any incorrect entries on your credit report. Make paying on time and in full a priority to improve your score and increase the availability and quality of credit items offered to you.

Debt

Whenever you borrow money, whether it’s for a mortgage, car loan or a credit card balance, it creates a debt until the loan is paid off. The longer you carry debt, the more you will pay in finance charges. Accumulating large amounts of debt can lower your credit score and also put you in a financial bind. While there may be times when you want to take on debt, such as for a purchase of a house or to finance college, in most cases you want to avoid it whenever possible. Becoming debt free should be a top financial goal.

Emergency fund

Most financial experts recommend that in addition to any money you save for retirement or for your kids’ education, you also save money for an emergency fund. This is money you keep in an easily accessible taxable account, such as a savings or money market account. The money is there to help you through an emergency, such as a job loss, major repairs to your house or a major medical crisis.

A good rule of thumb is to save enough to cover at least six months’ worth of your household expenses. Having an emergency fund prevents you from having to run up huge credit card debts or borrowing from tax-deferred retirement accounts.

FICO Score

FICO is the credit score most widely used by lenders and others. It ranges anywhere from 300 to 850, with an average score around 635. To calculate your score, FICO puts the most emphasis on your payment history, attributing 35 percent of your score to that factor. How much debt you have makes up 30 percent of your score. The length of your credit history makes up 15 percent of your score, while the types of credit you have and the amount of new credit you have each account for 10 percent.

An easy way to boost your credit score is to take out a small amount of credit and pay it off over a short period of time, this proves to lenders you are capable of paying your debts on time and will raise your score.

Growth stock

A growth stock is one that has a high potential for growth. That usually means it is a young company or one that has just produced a breakout product. Along with the high potential for growth, however, comes a high risk. Growth stocks often have unstable histories and products. If you want to mitigate some of the risk, you can invest in a growth-oriented mutual fund instead.

Review growth stock company information thoroughly before investing. If you don’t have a high tolerance for risk, a growth stock isn’t the best choice for you.

Home equity

This is the amount of money your home is worth minus whatever you owe on a mortgage. For example, if your home is worth $200,000 and you owe $140,000 on your mortgage, then you have $60,000 in equity. If you could sell your home for $200,000, you would get $60,000 in cash after paying off your mortgage. You can also borrow against your equity with a home equity loan or home equity line of credit.

While home equity loans carry a lower interest rate than personal loans that are not secured by property, you can lose your home in foreclosure if you can’t pay. Assess your finances to determine whether a home equity loan is worth the risk.

Index fund

An index fund is one of the simplest ways to invest in the stock market. Instead of investing in a particular industry or size of stock, an index fund simply seeks to replicate the performance of a stock index, such as the S&P 500 or Russell 2000.

Since index funds aren’t actively managed, they tend to have lower expenses than many other mutual funds. However, passive management means less human input, so guard yourself accordingly.

Jumbo mortgage

A jumbo mortgage is a mortgage that exceeds the conforming loan limits set by Fannie Mae and Freddie Mac. For most of the country, the conforming loan limit is $417,000, although it is as high as $625,500 in some parts of the country.

Because of the risk involved with a jumbo loan, it’s interest rate is usually higher than that of a conventional loan. Try saving for a larger down payment or scaling down your housing price range to avoid a jumbo loan. If you must have one, get multiple quotes to ensure you’re getting the best rate.

Keogh plan

A Keogh plan is a tax-deferred retirement plan that’s available to small companies and the self-employed. The plan can be set up as either a traditional defined-benefit pension plan or a defined-contribution plan. Contributions to the plan are tax-deductible up to 25 percent of annual income or net profits, up to a maximum of $51,000 as of 2013.

While saving for retirement is always a good idea, consider a SEP IRA over a Keogh plan. The contribution maximums are the same but the SEP IRA requires less paperwork.

Life insurance

If you’ve got a spouse, kids or assets you want to protect, you have a need for life insurance. Many people, especially those who are young and not married, think they don’t need life insurance. But even a small policy is a good idea to cover burial and funeral expenses in the event of your death.

There are basically two types of life insurance, term and whole. Though there are many variations of whole life, the policy is generally in force for as long as you pay the premiums and builds a cash value which you can borrow against or take in lieu of death benefits.

Term life insurance gets you a set amount of insurance at a set premium for a certain period of time. Term has no cash value and if you live through the term, you get nothing. However, the big advantage to term insurance is that you can get a large amount of insurance for very little money, so consider term if you have a family.

Matching contribution

A matching contribution, also called an employer match, is the amount an employer contributes to a retirement plan such as a 401(k). While some employers put contributions into a plan regardless of whether you contribute or not, most “match” a certain amount contributed by the employee. For example, your employer might contribute 50 cents on the dollar for the first 6 percent of your contributions, which means if you put 6 percent of your pay into your 401(k), your employer will contribute 3 percent. If your employer offers matching contributions, it’s important you contribute the minimum necessary to get the full match.

Net worth

Your net worth is a measurement of how much cash you could generate if you needed to. To calculate net worth, you simply subtract your liabilities from your assets. Assets include any money you have saved up or invested, equity in a home or car, any ownership in a business and the value of your property. Liabilities are generally any loan commitments you have, such as a mortgage, car loan and credit card balances.

For example, if you have a house worth $200,000, a car worth $10,000, savings and investments of $50,000 and personal property worth $15,000, you have $275,000 in assets. If you owe $140,000 on your mortgage, $5,000 on your car loan and $5,000 on credit cards, your liabilities are $150,000. That would leave you with a net worth of $125,000.

Calculate your net worth to see how healthy your finances are. If you’re carry little or no net worth, you must work on lowering your debts.

Principal

When discussing loans and investments, principal is the amount you borrow or invest, not counting any interest. Some investments guarantee that your principal will be protected; meaning you can only gain money, not lose it. With many loans, you may have the option to pay back your principal faster than your payment schedule, which will reduce the amount of interest you pay.

Qualified dividend

A qualified dividend is a distribution from a stock or other investment that qualifies for the lower capital gains rate. For a dividend to be qualified, it must be paid by an American corporation or a qualifying foreign corporation. You must also hold the stock for more than 60 days during the 121-day period that begins 60 days before the ex-dividend date. Reinvest dividends instead of pocketing the money to postpone tax payments.

Rebalancing

When you invest, you are hopefully following a strategy or philosophy. For example, when you are investing for retirement, the strategy often involves being more aggressive in younger years and then becoming more conservative in later years. Rebalancing involves adjusting your investment portfolio on a regular basis to keep certain investments from becoming too large based on performance. For example, if international stocks have a really great year, you may need to sell off some of your international holdings to keep them from becoming too large a part of your portfolio.

Self-employment tax

If you work for yourself or as a contractor, you are responsible for paying the taxes that an employer normally picks up for its employees. This is called the self-employment tax and consists of Social Security and Medicare taxes. You are responsible for the full amount, which is 15.3 percent in 2013. This tax is in addition to the income taxes you owe on your earnings.

To comply with IRS rules, you can make quarterly payments of your estimated taxes throughout the tax year. Form 1040-ES provides a worksheet for individuals who need to calculate estimate taxes and you can register with the IRS electronic system to make the payments.

Timeshare

A timeshare is a fractional ownership in a piece of property, often real estate. You usually pay a one-time fee plus ongoing monthly or annual maintenance fees. The ownership may be perpetual or it may be for a certain period of time. In return, you get a certain amount of usage of the property. Being part of a timeshare does not give you any actual ownership rights to the physical property, however.

Timeshares are depreciating assets and your interest in them can be hard to sell. Even when you’re able to sell, it’s often at a huge loss. While they usually seem appealing when first introduced to them, they have a lot of pitfalls and should be avoided by most. Weigh the costs and fees and the resort’s state before you consider purchasing a timeshare.

Underwater

When property you used to secure a loan is worth less than what’s remaining on the loan balance, you are said to be underwater. A more technical term for this situation is negative equity. Though this term is commonly used when referring to home ownership, it can apply to any secured loan if the value of the collateral falls below the balance remaining on the loan.

The federal government’s Making Home Affordable program offers loan modification options to those with underwater home loans. Contact the organizers to learn if you qualify for help on your underwater mortgage.

Vesting

Vesting is the process by which you fully earn an employment incentive or benefit. For example, many companies require a person to work for a few years before becoming fully vested in company contributions to a 401(k) or other retirement plan. If the person leaves before reaching the full vesting level, he forfeits some of those contributions. Confirm the vesting time in your company with your new employer and make sure you have full access to benefits with the time comes.

Withdrawal penalty

The Internal Revenue Service offers tax breaks on retirement accounts such as IRAs and 401(k)s to encourage people to save for retirement. As an additional incentive, it levies a 10 percent tax penalty if you take money out of these accounts before age 59 1/2. This is called a withdrawal penalty and it is in addition to any regular income taxes that are due on the money. To account for hardships and other situations that might require you to tap these savings, there are some specific exemptions to the withdrawal penalty.

X efficiency

In neoclassic economics, businesses and individuals must maximize efficiency to succeed when competition is perfect. However, in real life, competition is almost always imperfect and x efficiency measures the level of efficiency in such markets.

Yield

Yield is the income that an investment pays. With a stock or mutual funds, it’s any dividends they pay. With bonds, it is the interest they return. You can figure out the yield by dividing the payout by the price of the investment. For example, a stock with a price of $20 that pays a $1 annual dividend has a yield of 5 percent.

Use yield to assess potential returns on your investments. Don’t become blinded by a high yield, as a higher yield usually means increased risk.

Zero percent balance transfer

People with good credit scores often get balance transfer offers with an initial period of no interest, sometimes as long as 18 or 21 months. Such offers provide a good way to consolidate credit card debt and save on finance charges. However, they usually come with a fee that is a percentage of the balance being transferred and once the zero percent offer is up, the interest rate will revert to something much higher.

Balance the fees against how much you’ll save in interest if you consolidate your debt balances on one card. You must be able to pay the card off before the initial interest period ends to receive the full benefits of this maneuver.

Jamie Englert is the Editorial Manager at Car Finance 247, a leading car finance broker. He has a passion for digital and loves nothing more than grabbing a great deal.

(Photo courtesy of Martin Abegglen)

Death by Debt: 25 Ways You’re Killing Your Credit

August 6, 2013 By Guest Writer 2 Comments

By Jason Bushey

Few sectors of personal finance are as misunderstood as credit. We’ve all been passed on some semblance of how credit score works by our parents, but often those before us are as confused about their scores as we are.

How do you build credit? What affects our scores? How much debt is too much debt is too much debt? And – perhaps most importantly – how can I improve my own scores? (Yes, there are more than one!)

These are all excellent questions, and not all of them have such concrete answers. The fact of the matter is, there’s a lot that goes into your credit – and an equal number of ways to screw your score up completely. Below are 25 things you as an American consumer are doing that are absolutely killing your credit…

Refusing to acknowledge credit

Don’t be misunderstood; “no credit” in no way insinuates that you have “good credit”. Just because you’ve avoided credit cards up to this point doesn’t mean you look like a promising investment in the eyes of creditors. In fact, you’re a mystery, and are thus unlikely to get approved for a loan when you really need it.

Carrying a ton of credit card debt

Some debt is OK, even perhaps beneficial to your score depending on the credit scoring model. FICO, the most widely-used credit scoring model, even infers that carrying a very small balance might actually be better for your credit than carrying no balance at all. But a lot of debt? Spread across one or multiple cards? That rings an alarm sound for lenders to stay away from you.

Because a third of your FICO score (we’ll stick with this model the rest of the way to remain consistent) is determined by how much you owe relative to your total score, it’s important to keep your debt under 30 percent of your total available credit. That said, many experts recommend that the best “credit-utilization-ratio” is 10 percent and under.

Never using your credit card

The flip side of using your credit card too much (and refusing to pay it off) is never using it. Credit card companies reserve the right to close your card due to inactivity. If they close your account, you lose the credit line that goes with, and it stops aging – two things that might not necessarily hurt your score right off, but certainly won’t help it, either.

Use your cards sparingly to keep them open. Credit cards accounts are a lot like George Clooney – the older they are, the better they look.

Owning just one card

Your first credit card gets the ball rolling on building credit, but it can only take you so far. FICO takes into account the number of accounts you have, the kind of accounts you carry in your name and – again – your overall credit line relative to how much debt you carry. Opening up a new account extends your credit line and adds another good-standing account to your profile. That said…

Applying for several cards over a short amount of time

…is a bad idea. Every time you apply for a card, your score takes a small hit. This is to deter consumers from applying for lots of different credit cards or unnecessary loans. (Whether it works or not is hard to say.) This is called a hard inquiry, and they stick like glue to your credit report for two years, though in reality they really only have a negative effect on them for one. Too many of these on your profile make you look desperate and a tad irresponsible, neither of which are going to help build your credit.

Give it six-to-12 months between applying for credit cards to avoid that stench of desperation.

Closing old accounts

Unless you have a serious spending issue, it’s a smart idea to keep your credit card accounts open for as long as you can. Like we mentioned above, aged accounts have a positive impact on your score, and more importantly the credit line that provide allow consumers to carry a small balance without hurting their score.

There’s usually no good reason to close that old account, so keep it open and let it build your score one day (and purchase) at a time.

Making late payments

Late payments are costly to your credit score and your wallet. Though there are exceptions, the average late fee costs a cardholder $35. Plus if that late payment is reported to the credit reporting bureaus, the impact could be even great since it becomes a blemish on your otherwise sterling payments history. What’s the only thing worse than making a payment late?

Skipping payments entirely

You guessed it – skipping a payment can wreak all sorts of havoc on your credit. Your account may be sent to collections (usually after 60 days), your credit card company might begin to call you incessantly, and overall you’re probably going to start feeling really crummy about your personal finance situation.

Don’t let this happen! Never skip a payment and make maintaining an excellent score a priority; few monthly payments can effect as much as your overall credit score as the one required by your credit card. Keep it blemish-free.

Racking up interest

While high interest fees won’t directly hurt your score, they will make it harder to pay off your cards. This could in turn lead to snow-balling debt that increases your minimums and makes the likelihood that you’re late on a payment (or default altogether) more likely. You won’t be doing your bank account any favors, either.

If you’re racking up interest, consider transferring your balance to a new card that charges zero percent in interest during its introductory period. You’ll save money and pay back down your debt quicker at zero percent. It’s called “math” people!

Leaving yourself open to ID theft

Identity theft can be a credit killer, especially when you realize what’s happening after it’s too late. Carrying around unnecessary personal information like your social security number, using your credit card on public computers, using Password123 for ALL of your online passwords; these are all bad ideas that could leave you vulnerable to ID theft.

Take care with your cards, switch up your passwords and remove any unnecessary personal info from your wallet. It could be a credit score savior in the long run…

Using prepaid cards to build your credit

Don’t be fooled – prepaid cards do NOT improve your score in any way, shape or form. They might work as an alternative to a personal checking account, but because they’re not offering a line of credit, there’s no actual “credit” available on prepaid cards. Thus, they’re useless when it comes to building your score.

It’s not necessarily a credit killer, but it could very well be a waste of time.

Applying for the wrong cards

As you might have guessed, not all credit cards are available to all consumers. If your credit score is limited, bad or perhaps non-existent, you’re highly unlikely to get approved for those zero percent cash back cards you see advertised daily on TV.

Like we mentioned above, every hard inquiry of your credit has a small but negative effect on your score, and you want to keep these kinds of credit pulls at a minimum. Don’t waste a hard pull on a credit card you’re unlikely to get approved of. Similarly…

Taking snail mail credit card offers seriously

The word “pre-approved” is used pretty loosely these days, especially when it comes to credit card offers that find your mailbox. Just because you’ve been “pre-approved” for a credit card offer doesn’t mean your guaranteed approval. Not only that, there may be several other card offers available that work a lot better for you and your budget.

Think about it – if you hated flying, you wouldn’t sign up for a frequent flyer credit card, right? Don’t let the flattering pre-approved language rope you into a card you don’t want and will probably never use. The result could be a stale, inactive account on your credit profile.

Co-signing on a card with your irresponsible friend or family member

You may be a generous soul, but never get suckered into co-signing on an account with a friend or family member. Any missteps they have with this account will appear on your credit report. Don’t put your credit future in the hands of someone else. Politely decline any co-signing “opportunities” afforded by a friend or family member.

Taking out a cash advance

They aren’t quite as bad as Payday Loans, but with interest rates that hover around 30 percent and no grace period, your credit card is one of the last places you want to look for quick cash. In the end, the cash goes quick but the interest will surely linger, thus increasing your overall debt and the minimum payments due at the end of each month. That’s an unfortunate 1-2 punch to your wallet and quite possible your score.

Carrying a balance on multiple cards

When you carry a balance on more than one of your credit cards, you could be confusing the credit scoring models that be. The result – and I can speak to this personally – could mean a swift but significant drop in your score. I recently saw my Experian score drop 40 points, and the only thing that changed in the eyes of creditors was that I was once again carrying a balance – of $7, mind you – on my old card.

If you don’t believe me, maybe you should hear it from FICO: “A larger number of accounts with amounts owed can indicate higher risk of over-extension.”

Happy?

Assuming your student loans are enough to build substantial credit

It’s true that student loans can build credit. It’s not true that this is “enough” to build a substantial amount of credit, aka the kind of credit that can get you an auto loan, a mortgage, etc.

Student loans are considered installment loans. With installment loans, the amount owed each month is consistent. Creditors take these types of loans into account, but not as much as loans that are considered “revolving”; these are the loans in which the amount owed each month can vary. You know, like a credit card.

Plus, credit cards represent a line of credit available to you that you don’t necessarily owe. Installment loans on the other hand only represent how much you owe. It’s confusing, but in the end opening a credit card account will give you more of an opportunity to build significant credit.

Give your kids your credit cards

When you give your kids your credit card, you’re putting your credit score in the hands of someone who knows a lot less about credit than even you do. Adding your kid as an authorized user to your account is a good idea to help them build credit. But actually handing over said card is more than likely a bad investment.

If you’re really worried about their financial well-being in case of an emergency, set them up with a prepaid card instead. That way, there’s no danger of them falling into debt, and better yet no danger to you and your credit score.

Ignoring your credit report

By law Americans have the right to one free credit report each year. (You can actually apply to receive yours for free at AnnualCreditReport.com.) Your credit report provides the blueprint for how your score is calculated, and can clue you into little issues you either weren’t aware of or had no idea were affecting your score.

You might find an old overdue library book on your report, or perhaps an inaccurate address. Heck, you might find something on there that’s not yours AT ALL. According to a report out earlier this year by the FTC, five percent of credit reports contained serious errors that could alter a score by as much as 25 percent. One in four credit reports contained minor errors.

Basically, inaccurate information on a credit report is anything but rare. Review yours and research the necessary steps for getting these inaccurate claims removed from your report at once.

Allowing utility bills to pile up

Most utility companies won’t report your regular payments to the credit reporting agencies. But if you fail to make a payment, or decide to let these bills pile up and go late, they could report these bad habits to the major credit bureaus which will in turn make you look like more of a risk in the eyes of lenders.

Paying your utilities are unlikely to improve your credit, but they could certainly hurt it.

Sticking with your secured card for too long

Secured cards are actually a great way to build credit. That said, they have their limitations. Namely, their credit line increases are rare and can require a further deposit from the cardholder. Secured cards are also labeled as such on most credit reports. This is fine and doesn’t have a negative impact on your score, but again it does impose limits to just how much you can do with a secured card.

If you’ve spent a year or more with your secured card and have had no issues, you’re probably ready for an unsecured card. A new, unsecured card will increase your total available credit and add another new account to bolster your overall profile.

Lowering your own limits

Paranoid you’re going to spend too much on your credit card? You may ask your credit card issuer to lower your own limit. But as you’ve read a handful of times by now, your total available credit is only there to help you; lowering it is sort of like shooting yourself in the foot, especially if you’re already carrying a hefty balance.

Sock drawer that credit card if you’re really afraid of over-spending, but don’t willfully ask your credit card company to lower your own line of credit.

Changing your bank frequently

I bet you didn’t know that some (thought not all) banks check your credit score before approving you as a customer. Well, they do, and moving your accounts around frequently means that you’re generating more and more hard inquiries. Keep your money in one place and keep those hard inquiries at bay.

Applying for no-limit credit cards

Credit cards with no limit – such as business charge cards – sound like they should improve your credit exponentially with responsible use. But because they have no limit, the issuer isn’t reporting a line of credit to the issuers. Consequently, these cards aren’t improving your credit line or the all important credit utilization ratio we spoke of earlier.

There’s a limit to how much no-limit cards can really help your score, and the risk perhaps outweighs the reward.

Finally…

Maxing out your cards

We talked about carrying a high balance earlier, but how about maxing out one (or all) of your credit cards?

Yup – that’s a bad idea, too.

This isn’t an arcade; hitting the high limit is not a good thing when it comes to credit cards. It’s not as if your credit card issuer will extend your credit line once you’ve hit your limit. Nor will another credit card company be willing to take on such a high amount of debt via a balance transfer.

Basically, maxing out your cards is a sure sign to credit card companies that something about your finances isn’t right. Thus you start to look like a serious credit risk and, ultimately, your credit score can and will suffer significantly.

This post comes from personal finance blogger Jason Bushey. Jason runs the consumer comparison website Creditnet.com, an online authority on all topics related to credit.