(Toledo News Now) - Ever wonder why your neighbor got a lower mortgage rate than you? Or why car advertisements promise 0 percent interest, but you cannot get it? In many cases, it is because of your credit score. Common mistakes that you make will kill your score.
It is one of the most mysterious numbers in our lives: our credit score. We all know that a good score is essential to get a home or car loan, but how do you improve it? More importantly, what are the credit score killers that can hurt you?
John Puthoff thought he would check his credit score before applying for a loan.
"Getting ready to buy a house, selling mine, and wanted to see where my score was," said Puthoff.
He was stunned with the results. First, because the three credit bureaus all charged a fee, and second, because they all had different scores.
"I got a score which was higher than the 850, which is the max, so I ended up confused," said Puthoff. "It was easy to find it. As far as finding out why my score is what it is, that was difficult. I think they should make it easier to look up without difficulty."
Veteran credit counselor Mary Hurlbert said your FICO score is the most important score and ranges from 300 to 850. Below 725 you will not be able to get a 0 percent car loan, or a low 4 percent home mortgage rate.
Hurlbert said many people lower their score by making simple mistakes. The top credit score killer is late bills. Even just one late credit card payment can damage your credit score.
"35 percent of your score is how you pay your bill. So for Pete's sake, pay every single bill on time," said Hurlbert.
Another credit score killer is using more than one-third of your available credit.
"If you have a credit card with a $6,000 limit, don't charge any more than $2,000 dollars," advised Hurlbert.
Having too many credit cards will also hurt your score.
"Don't open a credit card every time you go shopping because you're going to get 20 percent off. That's going to lower your score," explained Hurlbert.
However, the opposite is also true. Canceling several cards at once hurts your score.
Letting anything go to collections, even a disputed doctor's bill, will kill your credit score.
"Just don't let it go to collections...period," said Hurlbert.
According to Hurlbert, if you have poor credit, you cannot fix it in a matter of weeks, despite what websites claim. It takes two to four years of paying bills on time and paying off your credit cards.
For a free estimate of your credit score, check Credit Karma.
Your true FICO score will cost about $10. You can access it at My FICO.
Puthoff still wishes it was easier.
"I don't understand why they don't have just one score across the board that everybody uses," said Puthoff.
Bottom line: If you pay your bills on time, check your credit report every year for errors, and do not max out your credit cards, you should have a good score.
That way you don't waste your money.