5 Serious Credit Mistakes You Should Avoid At All Costs

Your credit score is a great indicator of your financial health and is arguably one of the most important scores you need to maintain in life.

Not only does it dictate the interest rates you’ll have to pay on your loans, but can even affect the job positions you qualify for. That’s why it’s crucial to be aware of and learn to avoid common credit mistakes.

If you want to maintain a strong credit history and keep your score as high as possible, stay away from these horrible credit mistakes.

Not Checking the Credit Score Often

Monitoring your credit score is one of the best ways to keep track of your progress and address any potential issues before they become significant problems. Generally, you’re allowed to check each of your three credit scores once every year for free.

Plenty of services can provide free access to your credit scores and update them regularly. While reviewing your credit health, look for things that could hurt your credit score or are already doing it and how to avoid them. You could also contact a credit correction law firm if you notice an error in your credit history

Being Late on Payments

Payment history has a huge impact on your credit score, even missing one could be devastating for your credit. Fortunately, late payments are only reported if you’re late by 30 days or more. You’ll still likely end up with the fees or penalties if you’re a few days late, but it won’t damage your credit score.

Even one late payment that hits the 30-day mark will remain on your report for seven years, hampering your credit growth the entire time. The consequences are even more severe if you have multiple late payments or a 60- day or 90-day late payment. 

Only Making Minimum Payments

One way to avoid late payments is by making the minimum payment on your credit card balance, which is allowed by most credit card issuers to make it easy to repay your balance. But solely making minimum payments all the time will increase the amount of interest you pay on the card.

Paying the minimum each month will leave you with a balance on your credit card and will increase your credit utilization ratio. A higher credit utilization ratio indicates to lenders that you may be living beyond your means.

Maxing Out Your Credit Card

Getting close to your credit limit puts you at risk for over-the-limit fees and could cause you to incur a penalty APR, which penalizes you with an interest rate that’s significantly higher than your regular APR. 

Maxing out your credit cards will also mean you have a high credit utilization ratio. This will lower your credit score and deter lenders or credit card issuers from working with you in the future.

Applying For Too Many Credit Cards

Each time you get a credit card application, it has the potential to take off points from your credit score. So applying for several credit cards all at once in a short period will cause you to have more frequent denials.

You’ll get denied more often because lenders will start to get suspicious of the sudden rush of multiple credit card applications.