A journey toward homeownership has many beginnings.

For many it starts with a dream. Then, comes the planning.

As you prepare for this exciting life event, it’s important to do everything you can to strengthen your financial profile. This includes working on your credit score.

Improving or harming your credit score can happen in an instant. So as you work toward building better credit here are some things to avoid.

Payments that go unpaid

Sure, it’s easy to say “I’ll get back on track next month.” But the reality is that a missed payment has a lasting impact on your credit rating.

So if you missed payment and surpass the creditor’s grace period, the negative mark can remain on the credit report for up to seven years.

Collections are called

When a credit company feels it has exhausted its efforts to ask for repayment, it’ll ask a collections company to step in.

Needless to say, any involvement from a collections company will appear on the credit report and stay there for a while.

That’s why it’s important to make up missed payments before it escalates.

Repossession and foreclosure

When a lender takes action through repossession, it is reclaiming property, such as a vehicle or house, as collateral for the loan.

A repossession is a clear indicator of the borrower’s inability to make good on payments. These major financial events will also show up on credit reports and lower scores.

Closing accounts

Consumers cancel accounts for various reasons all the time.

But canceling your credit card can have an adverse effect — and it has nothing to do with repayment.

When you close an account, you’re also reducing your overall credit load. This is fine if it happens in a vacuum. But the reality is that canceling a card will impact your credit utilization rate and credit history. These two can weigh on your credit score.

Charge offs

Companies move debt they believe is unrecoverable through charge offs. If they don’t think the borrower will ever pay it off, they just consider it a loss.

As a result, the credit is no longer viable. Not only is the credit holder missing out on purchasing power in the future, but they are also subject to ongoing reports for past due amounts and unpaid balances.


During financial crisis, some borrowers will have no choice but to file for bankruptcy. This is the point at which the borrower can no longer manage repayment of debt.

Since all the debt is wiped away under Chapter 7, it will remain on the borrower’s credit score for 10 years. However, if someone files for Chapter 13 and repays some of the debt, the negative notation will remain for seven years instead of 10.

New accounts

It’s easy to apply for a new credit card while out shopping or finding an online deal.

While building up your credit requires accumulating creditors, it’s also unwise to apply for too many cards over a short period of time.