Your credit score might not be the first topic of conversation among your family, friends, and certainly probably not your significant other, but that doesn’t mean it should go unnoticed. After all, you could be in for a huge shock if you go to apply for an auto lease, or even co-sign on a mortgage, only to find that you are denied because of your credit score. While that could cause a potential long-term relationship to end, it could also spell the end of your finances if you don’t get your score back on track by avoiding ways you could be hurting your credit score.
Not Checking Credit Report
The major credit bureaus offer a free copy of your credit report once a year where you can review every account in your name to make sure it’s up to date and accurate, not to mention an account actually belonging to you. Or you can use a service like CreditCheck Total that will pull in all 3 credit reporting bureaus for you. While it will not have your credit score, you can either pay extra for it, or if you take a look at your monthly credit card statement it will display your score, so you are now able to monitor every month to make sure it’s on the rise as you’re taking more notice.
While being a day late, or even twenty-nine days late for your payment due date will not be more than a late fee or an interest spike, which depending on the balance could be cause of concern, but when you hit thirty days is when it’s reported to the credit bureaus and your score will almost immediately drop, not to mention stay on your report for years to come. If you are having trouble staying on top of due dates, it’s a good idea to at least make sure the minimum payment is met by the due date so your account stays current.
Maxing Out Credit Line
Speaking of making the minimum payment, while it will keep your account in good standing, it will do little to bring your credit card balance down, depending on the balance, probably taking years if not decades to finally pay it off only paying that. As you continue to spend and not pay off the full statement balance, interest will be charged, which can be significant based on the rate, which could be upwards of 16% and that begins the quicksand of debt you will continue to sink in by maxing out your credit line and killing your credit score in the meantime.
Too Many Inquiries
Sure, in retrospect compared to late payments and maxing out your credit line, which are equally important factors in determining your credit score, inquiries will only reduce your score by a few points every time your credit is pulled, but too many can add up, also giving a potential lender the impression that you could be taking out more debt than you can handle. While you cannot avoid having your credit pulled for approval, just be sure that you are making the decision to proceed if you do have your credit pulled, to strive to improve your finances whether it’s to lower your interest rate with a refinance, or a better rewards credit card.