People often ask me how they can improve their credit score to qualify for a better mortgage or a better interest rate. The problem is that simply exercising good financial planning may actually lower your credit score instead of helping. Here are some actions to avoid, according to Money Management International (MMI), a credit and debt counseling nonprofit organization:

* Closing old accounts that you no longer use. Make sure you keep at least 3 accounts open, and that you keep one or two accounts that you have had for years. Closing all old accounts can shorten your credit history, which lowers your score.

* Avoiding all debt. No credit history at all is almost as bad as a poor credit history. Lenders want to see that you have a good history of managing your debt and repaying debts on time.

* Co-signing for a loan. This may help your friend or relative, but it won't help you. When you co-sign for a loan, any late payment, judgement, or default on that loan will show up on your credit history, which will lower your credit score.

* Assuming there's a grace period. A payment that's just one day late, if it's recorded, can affect your score.

* Rate shopping. Too many loan inquiries can count against you.

~ Dan Hoffman