How You Can Ruin Your Credit in No Time

If you have applied for a mortgage, personal loan, or credit card, you know that your credit score is a deciding factor in not only if you are approved for the terms, but also will determine the interest rate.  The better your credit score, the less of an interest rate, so the worse off your credit is, the more you will be paying each month.  By staying on top of your credit you can continue to see your score rise and take advantage of the best interest rates on the market so you can maximize savings.

Not Checking Credit Report

These days you just never know who could have your credit information.  Whether it’s stealing your card information, or even having retail stores or credit bureaus compromised and have your data leak out, you can never be too careful, especially when it comes to your credit report which could have long-term financial implications if damaged.  By checking your report for free at least once a year you can make sure your accounts are up to date an accurate.  While your score will not be included for free, the good news is now it is included on monthly credit card statements so you can view every month when you check your balance.

Missing Payments

One of the largest factors in your credit score is your payment history, so as soon as you are thirty days late, it will be a hit on your credit report for up to seven years.  Now while you will not be dinged for being a day late, but you can get hit with a late fee or an interest rate spike that can cost you money in the long-run.  If you can schedule automatic payments you will always ensure you stay on track and never miss a payment.

Maxing Out Credit Limit

Just as important as payment history is your credit utilization, so as you continue to charge and almost hit your limit, your credit score will suffer in return.  Not only is it important to pay your statement balance by the due date but paying the entire statement balance will ensure that you do not get charged with interest by carrying over a balance.  If you have had spending trouble in the past, finally get a card down to zero balance and want to avoid going down the same path again, you may think about closing the account, but that can actually hurt your score as it takes away from your available balance, especially if you have open balances on other cards.  If you keep the account open but cut up the card, you can have the best of both worlds; not be able to use the card any longer, but still count the available credit.

Opening Too Many Applications

While having your credit pulled can only reduce your score by a few points, opening too many may cost you the line from having ‘good’ to ‘excellent’ credit and you could be missing out on the best rate available.  When having your credit pulled, just limit to those accounts you really need to open to save money such as a refinance or a credit card with better rewards.

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