Six Terrible Mistakes to Avoid with our Credit Score

american-express-visa-master-card-credit-repair-system-credit-score

Nobody can deny the importance of credit scores anymore. After all, it affects your various parts of life significantly. It determines whether or not you can:

  1. Qualify for a credit card
  2. Obtain a loan
  3. Pay less on insurance premiums
  4. Pay less on credit card/mortgage interest rates

Most significantly, your credit score determines if you’ll pay less or more when you think of making big purchases. If you have a low credit score, you’ll pay much more than the person with a better credit score and vice versa.

Believe it or not, a good credit score determines if you’re a married material nowadays. So, don’t be surprised if your date asks you, “What’s your credit score, by the way?” amid a romantic dinner. After all, a credit score is a big turn-on for girls since they can determine if the guy is a loser or a financially responsible person.

After digesting all these facts, you must be eager to keep your credit score as stellar as possible. Here are the six mistakes you must never make to maintain a great credit score.

Mistake# 1: Forgetting due dates and paying bills as per your wish.

You don’t rule the world, and you can’t pay bills as per your whims. Creditors are not your slaves. So, they’re not going to receive late payments happily. Instead, they will punish you by charging late fees and reporting to credit bureaus if you pay bills late. This means you’ve to pay the extra money, plus the negative tradeline will appear on your credit report for seven years. Not to mention that your credit score will drop as well.

Mistake# 2: Applying for credit cards you don’t even need.

When you apply for a store card just because it gives you a 10% discount on your purchases, you invite creditors to pull your credit report and check it out. This means you’re triggering a credit inquiry. The higher the number of credit inquiries, the riskier you’ll appear to your creditors. This will hurt your credit score as well.

Mistake# 3: Making creditors nervous with overutilization of credit.

Overutilization of credit cards is bad for your financial life. It happens when your credit limit is
$10,000, and you charge $9500 for buying various items. This means your current credit-utilization ratio is 95%. Remember, the higher your credit utilization ratio, the lower your credit score. Ideally, it would be best to stay within your credit limit. It’s best when your credit utilization ratio is below 30%.

Mistake# 4: Staying away from credit cards and loans altogether.

Don’t run away from credit cards. You won’t be able to build a credit history without credit cards and loans. So, if you don’t have a credit card, it’s time you get one. Just make sure you use it responsibly. Make an occasional purchase with a credit card. Then, pay the balance in full every month. This will help you have a good credit score.

Mistake# 5: Not looking at your credit report occasionally.

In a perfect world, you wouldn’t have to check your credit report from time to time. There wouldn’t be any case of identity theft. You could blindly trust credit bureaus, creditors, and debt collectors. Unfortunately, we don’t live in that world. Identity-theft cases are rampant in the country. Besides, 1 in every five consumers has mistakes on their credit reports. These mistakes prove costly in the long run and drop your credit score.

Mistake# 6: Taking out payday loans to meet your short-term financial needs.

This doesn’t mean your credit score will drop as soon as you apply for payday loans. If you can manage payments, then there won’t be any problem. However, the problem is it is pretty tough to pay off these loans. These loans come with very high-interest rates, making payments difficult. And, when you can’t make timely payments, you’re awarded additional interest rates. Besides, lenders report late payments to credit bureaus, and your credit score drops.

Conclusion

Perhaps, the worst mistake is to file bankruptcy since it drops your credit score. It can be an easy way out of your debts. But its effect on your credit score is disastrous. Your score will drop by more than 200 points. It will take a lot of time to rebuild your credit and return to your previous score.

Seek counseling when there are too many financial problems in your life. Then, try to find out other ways to resolve issues. When you seek counseling from the right organizations, you’ll know that there are many different options to solve your problem apart from bankruptcy. Some of them are debt management, debt consolidation, and debt settlement. You can choose any one of them.

“Have what you have, spend less.”

Samuel Johnson, 18th century English intellectual and writer.

We at Credit Repair Systems Inc of Miami offer this service. With decades of experience in credit counseling and credit counseling, we can advise you on the best way to keep your credit positive and even appeal decisions that negatively affect.