Helping You Avoid Life's Financial Mistakes

How Old Credit Cards Can Erode Your Credit Score

Today’s tip is pretty simple, follow it and you’ll be fine.  However this little financial mistake could cost you and your credit score if you’re not careful.

What Age Has To Do With Your Credit Cards

Age has a lot to do with your credit score.   It’s just one of the vital parts they use to calculate the score itself.  So what does it have to do with you?

Good question.

The age of you credit cards is very important.  The credit bureaus calculate it by taking the ages of all your accounts and averaging them all together.  Let do an example to illustrate the point.  Let’s say you have five credit cards all started at various different times.

  • Card 1# is 15 years old
  • Card 2# is 10 years old
  • Card 3# is 5 years old
  • card 4# is 3 years old
  • Card 5# is 1 year old

Together, the average age of you credit cards is almost 7 years.  Not bad, but let’s say you stopped using your 3 oldest cards and decided to cancel them.

What is your average age then?  Your average would have dropped from 7 years to 2 years.  Thus, negatively affecting your credit score.

How To Avoid This Mistake

To avoid this hazardous mistake look at canceling your newer credit cards first.  These cards won’t affect average age as quickly however this may be tough to do if the newer card is offering you some big rewards.

If that’s the case cancel the next most recent card. Also, don’t cancel more than one card at a time. Wait at least three to six months before you decide to cancel the next one.

If you follow these tips you’ll have fewer hiccups with your credit and be able to keep an older credit average.

Chris

Why You Need To Stumble To Move Forward

Have you ever made mistake?

I’m sure we all know of few times when we realized that we screwed up.  I can think of a few times inparticular.

In this post my outcome here is to show you that making mistakes are OK as long as you learn from them and keep moving forward toward your goals.

Don’t let mistakes run your life.

Before entering a career in financial services I had just gotten married and had already been making financial mistakes from day one.  I was buying things at random not even considering my cash flow or what I had.  Within a few years I had a timeshare, a couple of snowmobiles, and a mortgage.

Remember at this time I didn’t have a clue about money.

Then it hit me like a ton of bricks.  I woke up one day and realized that I had to deal with the mistakes that I had made and at first they were hard to admit but I finally had faced my fears.  A friend of mine who got me started in financial services helped me out putting me on the right track.

Today I have to admit that I am not where I want to be but I’m getting closer everyday.  This inspired me to  get started in financial services.  I figured if it didn’t work out I would at least get an education in how money works, something I didn’t have.

Your mistakes

After that point I realized a few things:

  1. Mistakes are a part of life.
  2. Don’t be afraid to make them.

It was at that point that I realized that mistakes are a natural part of life and how we learn things.  Imagine, if I didn’t make those mistake I wouldn’t have been inspired to get into financial services, to learn more about how money works, how to run a business, or even to start this blog.

It’s odd how life sends you down some interesting roads.

Mistakes are what makes us better.

Even though we may have made mistakes with are money and in are personal lives that doesn’t mean that we are failures.  With every mistake that we make is one more chance that we have to learn from it and get better.

On the other end of the stick though don’t try to be a perfectionist.  I notice this out of a lot of people especially business owners.  They try everything not make a mistake and when they do they put themselves down by criticizing there mistakes.  Eventually to the point were they believe they can do no right.

Call to action.

Now it’s your turn to act.  Here are a few ways you can make less mistakes.

  • Educate yourself on what you are trying to achieve and you will be likely to make less mistakes.  If you would like to make less mistakes with your finances sign up for my RSS and also check the blogs on my blogrollto grow your knowledge.
  • Start a To Do List.  I like to call this my actions list.  I use this a lot of times to get my mind off the mistakes I make and keep me focused on moving forward.

Last, what financial mistakes have you made?  If you would like to share them leave a comment at the bottom of this post.