When it comes to managing your credit and building a good credit score, it’s important to avoid making common mistakes that can damage your credit and make it harder to access credit in the future. Here are 5 credit mistakes you should never make:
- Not paying your credit card bills on time: Late payments can result in additional fees and can damage your credit score. Make sure to pay your credit card bills on time every month to avoid these penalties.
- Maxing out your credit cards: Having high balances on your credit cards can hurt your credit score, as it shows that you are using a large portion of your available credit. It’s important to keep your credit card balances low in order to maintain a healthy credit score.
- Applying for too much credit at once: Each time you apply for a credit card or loan, it generates a hard inquiry on your credit report, which can temporarily lower your credit score. Avoid applying for too much credit at once to prevent damaging your credit score.
- Not reviewing your credit report: It’s important to regularly review your credit report to ensure that the information is accurate and up-to-date. Errors on your credit report can hurt your credit score, so it’s important to dispute any errors with the credit bureaus.
- Closing credit card accounts: Closing a credit card account may seem like a good way to avoid overspending, but it can actually hurt your credit score. Closing a credit card account can lower your credit utilization ratio, which is the amount of credit you are using compared to the amount of credit available to you. This can cause your credit score to drop.
In addition to avoiding these common credit mistakes, it’s also important to be aware of other factors that can affect your credit score. Allowing charge offs on debt accounts, credit cards, and medical bills can damage your credit score, as can being consistently late on utility payments. By being mindful of these factors and avoiding common credit mistakes, you can help protect your credit score and maintain good credit.
