Most of us actually think we have great credit, so much in fact that we never check our credit report. Honestly, when is the last time that you looked at your entire report? Credit scores are the primary approval factor when it comes to getting a mortgage, personal loan, or a credit card, and the lower your credit score is, the more the unfavorable rates you will receive. Whether you actually have great credit or are in need of improvement, avoid a few actions that can easily reduce your credit score.
Not Checking Your Credit
Plain and simple, not checking your credit report leave you open to potentially plenty of negative impact on your score. You can actually receive a free copy of your credit report through any of the three major credit bureaus – Experian, Equifax, or TransUnion, once a year. Although it will not have your score, you can at least go through all of your personal information, open accounts, and history to ensure that everything is accurate. To see your score, most credit card companies show your score while in your online account, or through your monthly statement.
Missing Even One Payment
Payment history is so important to your credit score that you need to make sure you make every payment by the due date. Going past the due date will not necessary be reported to credit yet, but it can spike APR and you could incur a late fee. Late payments are reported to credit after thirty days, and this negative history can drastically reduce your score and stay on your report for up to seven years.
Going on a Shopping Spree
Coming home with bags of purchases may not affect your credit overnight but there are a couple of ways this could turn out. A large portion of your credit score is based on the amount of debt versus your available credit, so if you charge up your card, you are showing that you may not be a responsible borrower. The other way this can go is that if you cannot pay off the entire balance, you will start to incur interest charges and who knows when you will pay it off.
Loan repayment terms are usually what we think about when it comes to credit, but ignoring bills such as medical, utility, or tax can be put against your credit and will not come off until the account is paid and settled.
Too Many Loan Applications
Every time you have a lender pull credit to get pricing for a mortgage, personal loan application, or credit card, you are putting an inquiry on your report that takes points off, and can stay on there for up to two years, so it is important to make sure that if you are having credit pulled, that it is a necessity and the number of pulls will slow down after, so you do not give lenders the idea that you are going to open up many accounts and go on a charging spree. Although that does sound fun.