Four Mistakes that Unknowingly Affect Your Credit Score

It’s no big secret that the economy isn’t exactly thriving at the moment. In fact, it is downright depressing for millions right now. In such a shaky economy, many families have been affected in a very negative manner. People are losing jobs, incomes are shrinking and bank accounts are suffering. While the present state of the economy has taught you that financial situations such as foreclosure, repossession, debt and bankruptcy will deeply impact your credit score, these are not the only things that can lower your score. Those who haven’t experienced any of these situations and are breathing a huge sigh of relief right now: stop. You might be wrecking your own credit score without even realizing it.

Too Many Credit Applications

Every store that offers a credit card also offers incentives, such as a large percent off the total purchase you make when you are approved for a card. When you go shopping and decide to apply for a card at every store with the thought that you simply won’t use the card when it arrives, you are not making a good decision. Each time a store pulls your credit to approve you for a card your score drops three to five points. If you applied for four cards at three different stores to save 20 percent each on your new living room furniture, television and lawn mower, you just lowered your own credit score approximately 15 points.

Missing Payments

Remembering on the fifth that your credit card payment was due on the fourth is a huge no-no, even if you have never made one late payment in your life. A payment that is even a day late can result in the loss of around 100 points off your credit score. As long as you do not make any additional late payments, your score should rebound in approximately one year. However, a loss of 100 points can be the difference between a good interest rate and a poor interest rate on a new car or loan, which could cost you thousands of dollars over the life of the loan.

Spending Too Much

When you make a purchase with your credit card you need to pay it off in full each month. Not paying it off in full leads to several situations. The first is that you will pay interest on your outstanding balance, which makes everything you purchased that much more expensive. Additionally, your credit score is negatively impacted when your cards carry a balance of more than 33 percent of your credit.

Not Checking Your Score

As many as 40 percent of credit reports have an error listed. These errors are easily fixed and can be done relatively quickly; however, many people do not check their credit report regularly, therefore not noticing any potential mistakes. A mistake on your credit report can have a negative impact on your credit score. Check your credit report at least once a year to ensure that it is accurate.

Now that you know exactly how to prevent your credit score from falling, you should have no problem maintaining your excellent credit score, or improving your less than excellent score. Having a good credit score can make a huge difference in your financial situation; keep your score a priority at all times.


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