When we go through life, the credit score we have can be the difference of getting approved for our loan, getting into our dream apartments or being forced to settle on a less-than-ideal one, or even being given consideration for certain positions. It's important to know how to fix credit mistakes and avoid them. This article will highlight 10 of the most common credit mistakes and provide practical tips on how to address them.
- Close your old credit cards
Closing a credit card account that is older than 3 years can have a negative impact on your credit score. Keep old accounts open to increase the length of your credit history.
- Not Understanding Your Interest Rates
Not understanding your interest rates can lead to unexpected fees and charges. It is important to read the terms and conditions of your credit cards carefully.
- Cosigning loans
You can lose your credit score by cosigning for someone else if they default. Think carefully before cosigning for someone else.
- Avoiding Credit Repair Scams
These scams often involve high fees with little to no return. Avoid these scams if you work with reputable agencies to repair your credit or improve your credit score.
- Retail Store Credit Card Applications
Applying for retail store credit cards can be tempting, but these cards often come with high-interest rates and fees. Do your research before applying for any retail store credit card.
- Too Many Credit Applications at Once
If you apply for many lines of credit at once, it can damage your credit score. Avoid this mistake by spreading out your credit application.
- Having Too Many Credit Cards
Having too many cards can lead you to overspend or miss payments. Your credit card account number should be kept to a minimum.
- Don't ignore the benefits of credit cards
Credit cards often come with rewards and benefits. Use these benefits to make the most of your credit card.
- No emergency fund?
A lack of an emergency fund may lead to missed payments or damaged credit. To avoid making this mistake, create an emergency fund.
- Late Payments
A common mistake is paying your bills late. This can negatively impact your credit score. Late payments will remain on a credit report for a period of up to seven year. Set up automatic payments to pay on-time.
You can improve your financial situation by avoiding common credit mistakes. Not only will this help you qualify for loans and better interest rates, but it can also improve your overall financial well-being.
Frequently Asked Question
What is a high credit score?
A good credit score is typically considered to be 700 or above.
How often should I review my credit report and score?
Check your credit report every year.
Paying off a loan before the due date can hurt your credit score.
Paying off your loan early will actually improve your score. This is because it reduces your credit utilization and shows lenders that you are responsible when using credit.
Can I improve my credit score quickly?
It takes time to improve your credit score, but you can see the results in a few short months by paying off your debts and fixing errors on your report.
What should i do if a mistake is found on my credit report?
You should contact the credit bureau that reported the error as well as the lender who provided the inaccurate information if you find an error in your credit report.