Wanna be smart about your finances? Then don’t do anything that’ll hurt your credit score! Experts say that even a small drop in your credit rating can cause problems - like lower credit limits, higher interest rates on your mortgage and credit cards, denied loan applications, or even missed job opportunities. So, here are the mistakes to avoid at all costs, courtesy of AOL News:
- Don’t miss a payment. Your payment history accounts for a whopping 35% of your credit score. In fact, even if your credit is excellent, just one missed payment could drop your score 100 points. Don’t count on a grace period. These days, some lenders report missed payments after just a day or two. The fix: Always beat those due dates by paying your bills online. Even better, set up an automatic payment.
- Another mistake that’ll hurt your credit score: Maxing out a credit card. Experts say that if you owe more than 10% of your credit limit, that’s a big ding against your credit score. So, if your credit card limit is $10,000, your balance should not exceed $1,000. If you’ve already hit the limit, try to pay your balance down before the statement cycle ends because that’s when lenders report your outstanding balance to the credit bureaus.
- Don’t be tempted to open a new card. Experts say that opening just one new account could lower your credit score 10 points.
- Also every credit card balance is considered an “unsecured loan” – unlike, say, an auto loan where they could recover their money by repossessing your car. With a past-due credit card balance, there’s no collateral to repossess. Which means, having too many credit card balances could make it harder to get a loan to buy a home or a car.
- Your credit score could also be hurt by identity theft – or even an old, forgotten library fine. So, check your credit report for free every four months at AnnualCreditReport.com. If you’re gearing up to buy a house, it’s probably worth the $16 to get your credit score at MyFICO.com. That way, you’ll know how much damage control you need to do.