10 Top Credit Mistakes to Avoid

Avoid hurting your credit score by avoiding these mistakes!

1. Don’t Miss a Bill Payment – Missing or skipping a payment on a credit card or loan can negatively affect your credit. If you miss your payments over a long period of time, the debt may be transferred to a collection agency which will also negatively impact your credit.
2. Don’t Max Out Your Credit Cards – Using the full amount of credit that has been given to you may negatively impact your score because it looks as though you are relying on it. Using under 30% at any given time shows that you are responsibly using the credit while still being able to pay for things out of pocket too.
3. Don’t Take Cash Advances – This may seem like a convenient idea, but it actually costs you a lot more in the long run. There is usually a fee associated with a cash advance and it is most likely going to have a higher interest rate than your normal credit card purchases.
4. Don’t Chase Rates – If you’ve already got debt and you see that you could open a new card with a lower interest rate; it may be tempting to just transfer your current balance to the new lower rated card. This twice about this plan, opening a new card can lower your credit score (if too many companies check it at the same time) and transferring a balance usually comes with a fee.
5. Don’t Stop Using Your Credit Cards – If you don’t use a card for some time, the creditor might mark it as “inactive” and stop reporting the account. This can result in a lowered age on the account which can lower your credit score.
6. Don’t Apply For Lots Of Credit Cards At Once – When you fill out a credit card application, the inquiry into your credit report lowers your score by a few points. When you are shopping around, having many inquires within a short period of time will multiply the effect.
7. Don’t Spread Out Mortgage Or Auto Loan Applications To Protect Your Credit – Researching into mortgages and auto loans has a different impact on your credit than credit cards. It is understood that for larger purchases you will want to look around for the best rates. You should, however, keep this research to within a month’s time to have it be considered one inquiry.
8. Don’t Co-Sign Someone Else’s Loan – Co-signing for someone else’s loan is essentially using your credit to help someone, that otherwise would not be approved, get approval for a loan. This is always a risky move because if the person does not pay back the loan or is late with payments, it will negatively impact your credit as well.
9. Don’t Forget To Monitor Your Credit To Catch Errors Or Fraud – It is pretty simple to sign up for credit monitoring for a small fee. By having your credit monitored, you will be notified at any point that your information changes. If you didn’t initial that change, you are then able to take quick action to stop any potential damage. It is your decision whether the extra safeguard is worth the financial cost.
10. Don’t Pay For A Credit Repair Service – A credit repair service can usually be considered a waste of your money. If you have negative marks on your credit because of your own actions, or inactions, then these cannot be removed. If you have negative marks on your credit that is not accurate, then you have the ability to remove them yourself by calling and disputing it.