When we go through life, the credit score we have can be the difference of getting approved for our loan, getting into our dream apartments or being forced to settle on a less-than-ideal one, or even being given consideration for certain positions. It's important to know how to fix credit mistakes and avoid them. This article will provide tips and tricks on how to fix the most common credit errors.
- Not Understanding Your Interest Rates
Not understanding your interest rates can lead to unexpected fees and charges. It is important to read the terms and conditions of your credit cards carefully.
- You Should Check Your Credit Report
You should review your credit report on a regular basis to make sure there are no mistakes or fraudulent activities. You can access your credit report for free once a year from each of the three major credit bureaus.
- Failure to repay a loan
Defaulting on a loan can have a severe impact on your credit score. Contact your lender to talk about options for repayment if you are struggling to pay.
- Retail Store Credit Cards: How to Apply
Although applying for retail store cards may be tempting, they often have high rates of interest and fees. Think carefully before applying for these types of credit cards.
- Cosigning Loans
Your credit score may be affected if the borrower defaults. Be careful before you cosign for another person.
- Closing old credit card accounts
Closing old credit card accounts can negatively impact your credit score. Keep older accounts open to improve your credit history.
- Late Payments
Paying your bills late is a common mistake that can hurt your credit score. Late payments can be recorded on your credit history for up seven years. Set up automatic payment or reminders so you don't miss payments.
- Failing To Communicate With Lenders
If you don't communicate with your lender, it can lead to missed payment and damaged credit. Contact your lenders if payment is a problem.
- Do not use your credit cards
Not using your credit cards can impact your credit score negatively. Use your cards regularly and pay them off in full to build credit.
- What to do if you are a co-signer without a plan
A co-signer who does not have a plan in place can land you in a bad financial situation. You should have a plan to handle the payments in case the primary borrower fails.
By avoiding the common mistakes that people make with their credit scores and by taking action to improve it, you will be in a much better financial situation. You will be able to qualify for better rates and loans, as well as improve your overall financial situation.
FAQs
What is an excellent credit score?
A good credit score is typically considered to be 700 or above.
How often should I review my credit report and score?
At least once a calendar year, you should review your credit report.
Can repaying a loan earlier hurt my credit?
By reducing your credit usage rate, you can improve your credit score and show lenders that your are responsible with 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 be done if there is an error on my report?
You can dispute an error you find on your credit file by contacting the credit bureau responsible for the error, as well the lender who supplied the incorrect information.