Did you know that a lot of Americans don’t have great credit? If you want to learn about how to get a high credit score, we can help.
In this guide, we’ll go over what credit mistakes you should avoid. Get a high credit score by fixing these issues.
Want to learn more? Keep reading.
Avoid These Credit Mistakes
1. You Keep Missing Payments
Payment history can impact your credit and affect your FICO score. If you miss payments, you’ll end up with a subprime credit score. These missed payments stay on your report for years.
You should make sure you pay the minimum payment for your credit cards and loans. This way, you can prevent any late fees and also keep your accounts in good standing.
2. You Are Late Paying Bills
Late payment history will impact your credit score as well. Late payments on credit cards and loans will get reported if you’re later than 30 days.
One day late could result in a late fee, but it won’t damage your credit. Make sure you pay within 30 days.
If you get a late payment on your credit report, it will stay on the report for years. Pay your bills on time. You can ask for reminders from lenders.
Consider setting up autopay on your bank account or pencil in a few reminders to your phone.
3. You Make Minimum Payments Only
People who only pay the minimum amount on their credit cards will end up with damaged credit. The credit cards will carry interest, and you’ll end up paying more money long term.
Don’t carry a high balance on your credit cards. If you only pay the minimum amount, your credit card debt won’t ever diminish.
You’ll also have a higher credit utilization ratio. High credit utilization is the percent of your available credit that you use.
How much you owe will also impact your credit score. A high utilization rate can damage your score and drag it down.
Pay down your balance. Keep your balance below 30 percent at least. If you have a large debt, then slowly pay down your card balances if you can’t get below 30 percent right away.
Start making a plan to pay off your debt. Make a budget for the month. Write down all your fixed expenses and variable expenses. If you have some expenses you can cut, do it. Use the money to pay off your debt.
4. You’ve Applied for Multiple Credit Cards
When you apply for a new credit card, the lender will first need to run a hard inquiry. The lender has to learn about your credit and check your credit report.
The report will inform the lender if they should approve or decline your application.
When you look for different loans like auto or mortgage loans, multiple inquiries won’t harm you. All these inquiries during a short period get counted as one inquiry.
Each inquiry will count as one hit with credit cards when you apply for a few cards at once. One extra hard inquiry can knock off points on your credit score.
Many inquiries will harm your score, and creditors might see you as a risky borrower.
You can avoid damaging your credit by researching the different credit cards first. Apply for the credit card that fits best.
5. Don’t Take On Extra Credit You Don’t Need
People will take out a loan for a vacation or use their student loans for different purposes.
Yet, you’ll end up with a strained budget and have a more challenging time paying off monthly expenses.
Sometimes, people end up missing payments because they took on an extra loan they didn’t need. Your credit score will end up getting negatively impacted.
Apply for the credit you need. This way, you won’t end up overpaying on interest charges.
6. Forgetting to Check Your Credit
Make sure you check your credit. This way, you can spot any fraud or identity theft. Sometimes, errors occur, and late payments or incorrect balances get reported.
Errors and fraud can affect your credit score unless you file a dispute. Make sure you check your credit score so you can avoid this from happening.
Do you want to learn how to repair your credit? Consider a credit repair service. You’ll want good credit for a number of reasons. Work with a reputable credit repair company. Check it out!
7. High Credit Utilization
Having a high credit utilization rate will impact your credit negatively. Carrying a balance will affect your credit even if the account’s in good standing.
A lender might see someone with a high credit card balance and expect them to default on payments.
8. You Closed Credit Cards
If you cancel a credit card that’s old, it will look bad. You want to have a long credit history, not a bunch of new credit cards showing up.
Keep a few accounts so you can lower the risk of fraud.
9. Retirement Distributions
People will use retirement funds to pay off high-interest debt fast. This could lead to an increased credit score. Early retirement distributions will also be subject to taxes and penalties.
Avoid These Credit Mistakes
We hope this guide on credit was helpful. Avoid these credit mistakes by paying your bills on time. Try not to miss payments and not have a high balance on your credit card.
Are you looking for more helpful tips? Check out our resources on fitness and health.