5 Mistakes That Can Hurt Your Credit Score
Posted on 2015-07-15 09:00:30
Your credit score matters! A higher credit score can save you money each and every month through lower interest rates and better credit terms. It can add up to thousands of dollars over time—money that could be in your pocket instead of a creditor’s. Yet everyday people make mistakes that hurt their credit score. Here are 5 mistakes to avoid.
1. Late Payments
Late payments will put you on the fast track to a low credit score. Not only will you have late fees to pay, that black mark on your credit report is a red flag to other creditors to beware. Always, always, always make your payments on time. If you are the forgetful type, set up a calendar reminder or automatic payments to ensure that your payments aren’t even a day late.
2. Charging Too Much
Creditors like to see some leeway between your credit limits and the amount you actually charge. Most experts recommend you keep your balances below 30%; some recommend even lower. Just know that the ratio between how much you owe and your credit limit can account for about 30% of your credit score. Keep balances low for a better credit score.
Your Credit Score Is Clicks Away
3. Opening Too Many New Accounts
Don’t be a credit card collector. When your credit report starts showing an excessive number of inquiries from creditors wanting to review your credit report, it sounds an alarm, and your credit score could drop. Most credit score algorithms are somewhat forgiving for multiple inquiries for the same line of loan within a short period of time. But never apply for credit you don’t truly need.
4. Ignoring a Parking Ticket or Other Bill
Don’t try to pull a fast one by not paying a parking ticket. It could come back to haunt you. Some cities send unpaid parking tickets to collection agencies. And that’s when it can show up on your credit report and cause your credit score to plummet. Some utility companies do the same thing.
5. Failure To Know What’s on Your Credit Report
The information on your credit report is used to calculate your credit score. Mistakes can affect your credit score. It happens more often than you might think. Check your credit report for accuracy. Consider a credit monitoring service that will notify you whenever there are significant changes to your credit report that you should know about.
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