Damaging Credit Mistakes To Avoid At All Costs

Very few consumers have truly perfect credit, but a strong score is essential if you hope to be approved for a major purchase, like a house or car. Avoid the following mistakes to maintain a creditworthy status among lenders.

Paying Bills Late

This one is something of a no-brainer: if you have a habit of paying your bills late, you look risky to lenders and your credit score may drop significantly. Even two or three instances of late payments over the past two years can damage your creditworthiness for years to come.

Using Too Many Credit Cards

Many people have multiple – even many – credit cards. The trick is to only consistently use one or two, keeping the others down to a balance of zero. When signing up for new cards, at department stores for instance, remember that each one equals a credit inquiry. Too many inquiries on your report may signal financial troubles to potential lenders.

Having a High Debt-To-Credit Ratio

Are you maxing out credit cards or personal lines of credit? If so, you’re doing a grave disservice to your credit score. Lenders look at the ratio of how much credit you have to how much you are using, and many won’t approve a new loan if your debt load is too high. Most experts recommend utilizing no more then 30 percent of your available credit.

Failing To Check Your Credit Report for Errors

When applying for an important loan, the last thing you want is to be surprised by bad news. Checking your credit report at least annually ensures that you’ll catch errors, omissions and even cases of identity fraud.

Even if your credit is damaged, it’s not to late to reverse course. Follow the guidance above and, though it may take several years, your credit score is likely to begin inching upward.

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