Our credit score is often the difference in getting a loan approved or not. It can also be the difference in landing our dream apartment, or having to settle for one that's less desirable. Or even being considered for some jobs. It's important to know how to fix credit mistakes and avoid them. This article highlights 8 some of the most frequent credit mistakes, and provides practical tips on how you can address them.
- Do not check your credit report
To ensure there are not any mistakes or fraudulent acts, it is important that you review your report regularly. The three major credit bureaus offer free access to your credit reports once a yearly.
- Don't Use Your Credit Card
Your credit score can be negatively affected if you do not use your credit card. Credit is built by paying off your credit cards in full and using them regularly.
- Don't Pay Attention to Balance Transfers
Balance transfers, while useful for consolidating your debts can also be expensive and come with high rates of interest. Take note of the conditions of any balance-transfer offers.
- Having Too Many Credit Cards
Having too many credit cards can lead to overspending and missed payments. Maintain a reasonable number of credit card accounts.
- Using Payday Loans
Payday loans may be a costly error. These loans often come with high-interest rates and fees, which can spiral out of control quickly.
- Late Payments
A common mistake is paying your bills late. This can negatively impact your credit score. Late payments may remain on your report for seven years. Set up automatic payments or reminders to ensure you pay on time.
- A co-signer who does not have a plan
Being a co-signer without a plan can put you in a difficult financial situation. You should have a plan to handle the payments in case the primary borrower fails.
- Credit Repair Scams to Avoid
Credit repair scams might be tempting, however they are often expensive and produce little to nothing. Avoid these scams by working with reputable credit repair agencies or improving your credit score on your own.
Avoiding these credit mistakes, and improving your credit score can help you improve your financial standing. This can help you to get loans at better interest and improve your financial status.
The Most Frequently Asked Questions
What is considered a good score for credit?
A credit score of 700 or more is considered good.
How often should you check your credit report?
Check your credit report every year.
Is it possible to damage my credit rating by paying off an early loan?
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 I find an error on my credit report?
If you discover an error on your report, you can dispute it both with the credit bureau who reported the error and with the lender which provided the inaccurate data.