How to avoid harming your credit score

Credit score and rating
One of the most important factors of your financial life is your credit score. Your credit score is the most important factor in determining your interest rates and creditworthiness.

Credit scores are used by banks to determine credit limits, loan rates, and mortgage rates. Certain service providers use your credit score to determine the risk type of customer you are whether or not you should pay security deposits. Insurance companies use credit score to determine your monthly premiums.

It is important to know what you can do to improve your credit score, but you also need to be aware of what actions will harm your credit score. Listed below are few things you can do to protect your credit rating.

  • Paying credit cards late
  • Not paying your credit card bill at all. While this mistake is obvious, almost everyone makes it once.
  • Running up large balances on your credit cards, even if you pay it off every month.
  • Having creditors charge off your account when they think you won’t pay.
  • Having creditors pass on your debt to third party debt collectors.
  • Defaulting on loan you have taken out.
  • Ignoring or missing errors on your credit report. Check your credit report periodically to see if there are any inaccuracies.
  • Paying your rent late. Landlords have the right to report you late payments even if it is few days late.
  • Filing for bankruptcy can devastate your credit score.
  • Assuming your spouse’s credit rating ad actions have nothing to do with your.
  • Thinking you don’t have to pay your credit card balance when there items in dispute.
  • An increased debt/credit ratio is when your balances suddenly spike, but you have not been extended a new credit line
  • Having private or government liens against any property you own.
  • While it may seem counter intuitive, steering clear of credit and debt isn’t the responsible thing to do either.
  • When you co-sign a loan for a relative or friend, you open yourself up to blow-back from any bad activity that happens down the road.
  • Bouncing checks is similar to missing credit payments, a consistent inability to make payments through a checking or debit account.
  • Not paying your mortgage payments and having your lender foreclose on your home.
  • Borrowing money just to boost your credit score.
  • Racking up credit card debt early in life.
  • Having a court pass a judgement against you to force you pay a debt.
  • Maxing out your credit cards or going over your credit limit.
  • Closing credit cards that still have a balance on the account.
  • Closing old credit cards. It is better to have a long history of credit.
  • Applying for multiple credit cards or loans.

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