Credit scores are often a deciding factor in our lives. They can mean the difference between being approved for loans, getting our dream apartment and having to settle for less desirable ones, or even being considered as a candidate for certain jobs. To avoid making these mistakes, you must know what to do. This article will 8 the most common mistakes in credit and give practical tips to correct them.
- Do not check your credit report
You should review your credit report on a regular basis to make sure there are no mistakes or fraudulent activities. The three major credit bureaus offer free access to your credit reports once a yearly.
- Late Payments
Paying your bills late is a common mistake that can hurt your credit score. Late payments will remain on a credit report for a period of up to seven year. Set up automatic payment or reminders so you don't miss payments.
- Retail Store Credit Card Applications
It can be tempting to apply for a retail store credit card, but the cards usually come with high interest rates. Before applying for retail store credit cards, think carefully.
- Closing old credit card accounts
Closing old credit card accounts can negatively impact your credit score. Keep your old accounts open if you want to build up a longer credit history.
- Do not Pay Attention to Transfers of Balance
Balance transfers can help consolidate your debt, but there are also fees and high interest rates. Take note of the conditions of any balance-transfer offers.
- Maxing out Credit Cards
Credit card maxing can have an impact on your score. Keep your credit usage rate under 30% of the total credit limit.
- Don't Build an Emergency Fund
Missed payments and credit damage can result from not having an emergency reserve. Avoid this mistake by building an emergency fund.
- Falling for Credit Repair Scams
Credit repair scams may be tempting but they usually come with high costs and little to no result. Avoid scams and improve your credit by yourself or working with reputable companies.
You can improve your financial situation by avoiding common credit mistakes. Not only will this help you qualify for loans and better interest rates, but it can also improve your overall financial well-being.
The Most Frequently Asked Questions
What is considered a good score for credit?
A good credit score is typically considered to be 700 or above.
How often should I check my credit report?
At least once a calendar year, you should review your credit report.
Is it possible to damage my credit rating by paying off an early loan?
Paying off your loan early will actually improve your score. This is because it reduces your credit utilization and shows lenders that you are responsible when using credit.
Can I improve my credit score quickly?
The process of improving your credit score can take time. However, you can make progress in just a few months by settling debts, and repairing errors on your reports.
What should I be doing if I discover an error in my credit report?
If you find a mistake on your credit score, you should contact both the credit bureau indicating the error and lender that provided inaccurate information.