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. To avoid making these mistakes, you must know what to do. This article highlights 10 some of the most frequent credit mistakes, and provides practical tips on how you can address them.
- Using Payday Loans
Payday loans can be expensive. These loans have high rates of interest and fees which can spiral out-of-control quickly.
- You Can't Ignore Credit Card Benefits
Credit cards come with many rewards and benefits. Take advantage of these perks to get the most out of your credit cards.
- Do not use your credit cards
Your credit score may be negatively impacted if you don't use your credit cards. You can build credit by using and paying off your cards regularly.
- You Should Never Ignore Your Credit Score
Ignoring credit scores can have negative consequences. Regularly monitoring your score allows you to track and improve your progress.
- Cosigning Loans
If the person you cosigned for defaults on their loan, it can have a negative impact on your credit rating. Be careful before you cosign for another person.
- Foreclosure on Loans
A default on a loan could have a serious impact on your score. If you are having trouble making payments, contact your lender and ask about repayment options.
- Being a Co-Signer Without a Plan
If you co-sign a loan without planning, it can lead to a financial crisis. Before co-signing a loan, have a plan in place for how you'll handle payments if the primary borrower defaults.
- 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.
- Having too many credit cards
Too many credit card accounts can lead to missed payments and overspending. Your credit card account number should be kept to a minimum.
- Don't Build an Emergency Fund
If you don't have an emergency fund, it can lead to missed payment and damage your credit. Create an emergency fund and avoid this mistake.
You can improve your financial situation by avoiding common credit mistakes. Not only will this help you qualify for loans and better interest rates, but it can also improve your overall financial well-being.
FAQs
What is a good credit score?
A good credit score is typically considered to be 700 or above.
How often should you check your credit report?
You should check your credit score at least once per 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?
While it takes some time to improve credit scores, there are things you can do right away that will show results. For example, paying off your debts or fixing any errors in your credit report.
What should i do if a mistake is found on my credit report?
If you find a mistake on your credit score, you should contact both the credit bureau indicating the error and lender that provided inaccurate information.