Credit Mistakes: Things to Avoid

Credit Mistakes - Complete Controller

A worthy credit score is significant if you want to be entitled to future loans. Maintaining a good credit score is not a distant dream if you manage your finances wisely, handle your credit responsibly, and avoid making credit mistakes that would lower your score. A simple mistake can ruin the possibility of acquiring future credits.

While failing to make a mortgage payment due to unemployment or maxing out credit cards when you are swamped with medical bills can be difficult to avoid, many credit blunders occur simply due to negligence.

Credit Mistakes to Avoid Check out America's Best Bookkeepers

Not Paying Your Bills on Time

You may have the required amount to pay a bill; however, if you are unaware of the deadline or fail to make a payment, it could negatively impact your credit score. Even if the bank does not report you to the Internal Revenue Service (IRS) for paying a late fee, it will charge you a hefty penalty which could have been avoided. Late credit card payments can incur 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 which will pay the minimum balance and give you time to make additional payments. Check out America's Best Bookkeepers

Prioritizing Payments Incorrectly

Prioritizing your debt payments is essential to keeping a worthy credit score. Most people usually prioritize bigger loan payments like personal loans and mortgages over credit card loans. Defaulting on a bigger loan payment can result in critical financial circumstances when missing a credit card payment would 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 for larger loan amounts. Some credit card payments might be necessary to pay off as they are compounded. Therefore, prioritize payments according to the greatest impact of non-payment.

Not Checking Your Credit Report Regularly 

Checking your bills for any discrepancies can be a tedious task, but it must be done regularly. Sometimes, there are items on your credit report that are either charged mistakenly or fraudulently. You will never know if there are errors if you do not check your credit report consistently. You can dispute irregular charges within 60 days, but that is only possible if you are aware of them. However, charges related to fraudulent activities might afford you more time to dispute. 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 an annual fee, closing it can affect your credit utilization ratio, an important component in measuring a credit score. Check out America's Best Bookkeepers

Closing your oldest cards with a history of on-time payments can significantly lower your credit score, which will ultimately lower the amount of credit you can acquire in the future.  Lenders like to see credit accounts with a long history of on-time payments, so 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 affects it negatively. Even if you are not using an old credit card, it is better to keep it in a drawer and make small, recurring charges to it so that the bank does not close it due to inactivity.


Taking the time to pay bills on time, prioritize your debt and payments, check your credit report regularly, and leave open old credit cards with good payment history are ways to increase and maintain a worthy credit score.  Avoid making credit mistakes at all costs if you want to secure a healthy financial future for yourself.

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