Credit Blunders You Should Avoid

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A worthy credit score is of significance if you want to be entitled to future loans. Maintaining a good credit score is not a distant dream, provided you manage your finances wisely. Handle your credit responsibly and avoid making credit mistakes to keep your score at an optimum level. A simple mistake can ruin the possibility of acquiring future credits.

While some credit score killers are difficult to evade, such as failing to make a mortgage payment because of unemployment or maxing out your credit cards because you are swamped with medical bills, many credit blunders are simply due to negligence and can easily be avoided.

Credit Mistakes to Avoid

Not Paying Your Bills On Time

You may have the required amount to pay off a loan, however, if you are unaware of the deadline or accidentally fail on a payment, it could cause a major dent in your credit score. Even if the bank does not report you to the IRS for paying a late fee, it will charge you a hefty penalty which otherwise could have been avoided. Late credit card payments can be charged very high penalties. Therefore, it is important that you pay the amount due on time. To avoid credit mistakes related to late payments, you can use an automated payment process offered by banks. This will pay off the minimum amount and give you enough time to make the remaining payment.

Prioritizing Payments Incorrectly

Prioritizing your debt payments is an essential element of keeping a worthy credit score. Most people usually prioritize bigger loan payments such as personal loans and mortgages over credit card loans, which makes sense. Defaulting on a bigger loan payment can result in more critical financial circumstances for you, rather than missing a credit card payment which is going to cost you 1% or 2% of the balance. However, this is not a hard and fast rule and, depending on the payment amount, you should prioritize the payments. Some credit card payments might be necessary to pay off as they are compounded. Therefore, prioritize according to the situation.

Not Checking Your Credit Report Regularly 

Checking your bills for any discrepancies can be a tedious task but it must be undertaken regularly. Sometimes, there could be items on your credit report that are either charged by mistake or if someone has misused your credit card information. You will never be able to know about any possible errors if you do not check your credit report from time to time. You can dispute these charges within 60 days and that is only possible if you are aware of them. Though, charges related to fraudulent activities might allow you a longer time to dispute a charge. Not checking your credit report is one of the worst credit mistakes you could make.

Closing an Old Credit Card Account

You might be tempted to close an old credit card account, which has remained unused for quite a while. However, unless you are being charged a high annual fee, it can be a grave mistake. Closing a credit account can significantly lower your credit score which will ultimately lower the amount of credit you can acquire. Basically, it affects your credit utilization ratio which is an important component of measuring a credit score.

Closing your oldest cards with a history of on-time payments can be the worst credit mistake as it can significantly dampen your chances of acquiring a loan. Lenders like to see credit accounts with a long history of on time payments. Closing the account means that it is eventually written off from your credit report. Instead of having a positive impact on the credit report, it actually affects it negatively. Even if you are not using an old credit card, it’s better to keep it in a drawer and make recurring payments to it so that the bank does not close it due to inactivity.


Avoid these credit mistakes, at all costs, if you want to promise a secure financial future for yourself.

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