Five Bad Habits that Will Ruin Your Credit

| January 26, 2014

Five Bad Habits that Will Ruin Your CreditPeople strive to get their credit score as high as possible in order to get the best deal on a loan. While it takes many years to get your score up into the mythical 800 range, it can only take a moment before your score drops dramatically. Below are five habits to avoid if you do not want to ruin your credit score.

1 – Paying Your Bills Late

While an occasional late payment may not destroy your credit score, it is better to not even test a late payment. One of the best ways to make sure that you are paying off your credit card statement on time is to set a reminder on your phone’s calendar. If you give yourself a few days buffer before the payment is due, you will dramatically increase the likelihood of that bill being paid on time. Many companies offer automatic payments. To set this up you simply give the company your payment the information and it will be automatically withdrawn from your account each month. If you don’t feel comfortable with this you may want to look into companies that send payment reminders.

2 – Carrying a Large Balance

Just because your credit card has a limit of $5,000 does not mean that you should always have a balance that is near this line. According to the experts at, the credit bureaus look at your balance as one of the items on a credit report, and a consistently high balance is a sign that you are a risky candidate for any loan since you have a lot of high rate credit card debt.

3 – Not Checking Your Credit Report

By law, you are allowed a free copy of your credit report annually from each of the three leading credit bureaus. If you do not take advantage of this, you are throwing away the chance to catch any errors that may be on your credit report. Perhaps you did not have that bill that went to collections like the report said. If you notice something wrong with your report, you can turn to the experts at Lexington Law for help in settling your case.

4 – Not Using Your Credit Card

If you have a card and it sits dormant, this can also hurt your credit score. This is tricky since it is often enticing to charge all of your purchases to the card with the best rewards program. There are two good ways to start using your credit card. When you have a large purchase you need to make it with your credit card. This will help you remember exactly what was put on your card so you can easily remember to pay it back. Another way to start using it is to use it for all purchases and pay it off every week. This will give your credit card a lot of activity. If you have a credit card with a rewards program then using the credit card will start working for you by getting money back.

5 – Paying the Minimum Amount Due

This ties in with carrying a high balance, but you should do more than just paying that $15 per month that is shown as the minimum amount due. Credit cards can carry a high interest so continuing to pay the minimum will add up very quickly and thus ruin your credit very quickly. This is the easiest way to mess with your credit so pay attention to what you are paying.

Follow these five tips and your credit score will never be in serious danger.


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Category: Financial Planning

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