In everyday life, it is easy to exceed our budget or make financial mistakes that would put our credit history at risk. Unfortunately, it happens to everyone at least once in life to have bad credit management. We have compiled a list of totally avoidable financial habits that affect your credit history.
Too much verification of your account
If you want to better monitor your credit history, it is possible to check your account. Two audits per year are sufficient. Too many audits could hurt your story. Remember that when you apply for a new credit card, for a loan or for a mortgage, checks will take place. Credit agencies might find it suspicious that you are trying to get so much credit in such a short time. So be sure not to ask too much for verification in order to facilitate the credit application process in the near future.
Do not use a credit card
If you have never had a credit card or loan, then you do not have a credit history. This can become a problem in the future when you want to buy a car or a house. Banks and creditors do not just want to see you have a credit history, they also want to make sure it’s good. Having a card and paying it on time each month is a great way to accumulate a good credit history. So when buying something important, home or auto, you will have fewer problems.
Missing more than one mortgage payment
Missing even one mortgage payment is not a good idea, especially if you are trying to improve your credit history. But if you have a good history, the bank could forgive you once. On the other hand, if you miss it more than once, it could tarnish your history.
To have too much debt
can you consolidate payday loans? To have too many loans has been exceeded is not a good idea. This may prevent you, in the future, from getting a loan for the necessary things such as a house or a car. Even if you make the minimum payments each month, it still has a negative impact on your credit history.
Overuse of your credit cards
- Reach the maximum limit of the credit card. This only demonstrates to current and future creditors that you are not managing your expenses well and that you are a risky debtor.
- Have a lot of cards, but with a limit too small. This shows future creditors that you are not eligible for cards with larger limits.
- Open multiple accounts too quickly. Not only do you decrease the average age of your credit history, but you run the risk of accumulating new debts with the new cards.
- Apply for too many credit cards. The creditors will perceive you as a high-risk debtor.
- Spend more than 35% of the amount offered on the credit card. The ratio between the amount available and the amount used is a major factor in calculating your credit rating.
- Let your friends or family use your card. When it’s not about their card, people are less tempted to use it properly.
- Forgetting to check your credit card reports. Do not become paranoid, but be aware of what is important.
Take too much time to pay off debts
Credit agencies want you to repay your debts in a realistic time. Having a credit card debt for a long period of time can seriously damage your credit rating. Having a reasonable monthly debt and paying it off every month demonstrates that you know how to manage your loan responsibly. This only applies to missed payments. Make sure you always pay your debts in time so you do not hurt your credit score.
Put the accounts paid to an end
If you’ve just paid off a credit card that has been a big burden on your budget for a number of years, you think closing the account might be a good idea. On the contrary, it can hurt your credit rating. If you close your account, it also affects your usage ratio, which is the amount of money you have and the amount of money you use. Instead of closing the account, use this card instead to pay the monthly bills and not use it for outings or purchases. Thus, you will not hurt your credit history and, even, on the contrary, improve your history.
Do not vary these types of debts
Having a small amount of debt on the card and paying it monthly is a great way to build your credit history. On the other hand, those that many people do not realize is that by having a variety of debts, they maximize their credit score.
- Having a car loan demonstrates that you are able to execute monthly payments on time.
- Do not rely solely on your credit cards. Too many credit cards can negatively affect your credit score.
Update your credit card constantly
There is a multitude of credit cards and each time a new card is introduced, it seems more advantageous than all the others. It may be mixing to know which map is best for you. When you start your search for a credit card application, this is where you should do your research. By making the right choice from the start, you make sure you are not tempted to change your cards soon.
It is in your interests to keep the card with which you started. Creditors want to see loyal debtors and if you change cards constantly, it just sends the wrong message and it also has a negative impact on your credit history.
Maintaining a good credit score can be difficult because many variables matter and can affect your score both positively and negatively. Educating yourself and educating yourself financially should be your number one priority. Stop some bad habits and your credit score should see better days.