As good as your credit may be, there are plenty of money mistakes that can seriously hurt your score. To help reduce the impact of these mistakes, here are out top 10 mistakes that can hurt both your credit score and financial portfolio:
1. Not Checking Your Credit Score
Even by not checking your score, you may be hurting it. By checking on it regularly, you can reduce the amount of fraud and errors on your score and help boost it by reporting them. Plus, when you’re checking on your score, you can determine how healthy it is and take the steps necessary to strengthen it.
2. Ignoring Errors on Your Score
The worst thing you can do for your credit is to not check it regularly or report any errors you notice. Medical costs are the most popular mistakes that occur on credit scores since they can usually take a long time to go through. However, by using AnnualCreditReport.com, you can view your report and contact credit bureaus to fix any errors that you notice.
3. Using Too Much Credit
Using up too much of your credit cards can not only damage your credit score but also damage your relationship with your lender. Especially since lenders determine your application based on your score, you can be denied simply because you are using up too much of it. Ultimately, staying under the thirty percentage marker is key to being a good borrower. Try to keep your credit utilization below 30%.
4. Opening Too Many Credit Accounts at Once
Unfortunately, every time you apply for a new credit card or line of credit, you get a deadly credit inquiry added to your report. They may not seem so bad when you’re going through the application process, but they can seriously harm your credit if you have too many of them. Plus, it looks bad to lenders and they only expire after two years of appearing on your credit report. So, before you open an account consider your credit score and pre-determine how it may affect you and your future.
5. Closing Out Credit Cards
Closing out a credit card isn’t doing any favors to your credit score, in fact, it can harm it in more ways than one. You actually want to have older credit card accounts on your score since it looks like you have experience with handling your score which shows as a big green flag to lenders. Also, the longer your credit history is, the more opportunities you will have to get accepted during your application process. Remember, older accounts are better than new ones. Don’t be subject to simple mistakes such as getting rid of old credit card accounts.
6. Making Late Payments Or Skipping Them All Together
When it comes to your credit score, your payment history plays a big role. If you have a habit of missing payments and paying late, your score is likely to fall. Even one missed payment can have a big effect on an otherwise good credit score. Even if your score is 780 or above, a single 30-day delinquency could cause your score to fall 100 points, according to Credit.com. If you have a solid credit history, try talking to your lender or creditor and request that the missed payment be wiped from your record. Usually, the lender will do this for you if you have been a good customer and this is your first mistake.
7. Not Making The Minimum Payments Due
You should be trying to make at least the minimum payment due on all of your credit accounts. If you do not, your creditors will report that your account is past due. This can cause your score to drop. Not making the minimum payments can also result in a lot of late fees and interest charges being added. This can increase you overall debt considerably.
8. Having Checks Bounce
Bouncing a check is very similar to missing a payment on a credit account. Consistently failing to make payments with your debit account can cause your bank to notify a collection agency. This will negatively impact your score and may even prevent you from opening new lines of credit in the future.
9. Co-Signing A Loan
Though you may be tempted to help someone out by co-signing a loan for them, it can be a risky decision. Co-signing certainly does not mean that your credit will be damaged, but it is a possibility that you should look out for. For example, if the borrower stops making payments or makes late payments, you may be in trouble. When you co-sign, you are accepting partial responsibility for on-time payments. If the primary borrower fails to meet the loan terms, your credit score could suffer. Be very careful when co-signing for anything and ensure that the person is trustworthy and will be able to make all their payments on time.
10. Not Telling Creditors When You Change Your Name
Though this may not seem like a big deal, failing to do so can cause a lot of inaccuracies on your credit report. Your bank accounts, credit accounts, and other official documents are all linked to your credit report and your credit history. They all affect your score in different ways. Some of those ways may require you social security number to be valid and some do not.