A credit score is a measure of the creditworthiness of a person. The higher the number, the more creditworthy a person is. It’s possible for people to achieve scores in the 800s, which can help them get loans at lower interest rates, qualify for better insurance rates, and make it easier to rent an apartment or buy a home. There are certain things that can decrease your credit score without you even realizing it.
With a plethora of bad habits people can succumb to and some decisions that leave an individual in dire financial straits, it is possible for someone’s credit score to plummet almost overnight. Even if it only decreases by a few points, this can lead to major problems. This is why it’s important for people to avoid these bad money habits and adopt better ones. Every month a person changes any of these bad habits for the better; their score should see an increase.
Not paying bills on time
Late payments are an easy way for people to get into debt and damage a good credit score. Late payments can lower a person’s score by a few points, but it is still important to pay bills on time. The longer it takes a bill to be paid, the more it will decrease their score.
Not maintaining their credit report
People need to be aware of their credit reports and their importance. Having a low credit score because of inaccurate information in their report can lead to many financial problems. They have the right to have a complete record of their finances. People need to check that all individual accounts are accurate, and if something is wrong, it needs to be fixed immediately.
Not paying their credit cards on time
Failing to pay one credit card on time is like setting off a fire alarm in an emergency room. It can cause serious problems for a person, including the possibility of not being able to get another credit card for months or even years.
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Having too many cards
It’s tempting to take new credit cards every time one springs up, and there is an offer of a low-interest rate. It’s easy to fall into this bad habit, but it is a terrible idea. People need to think like lenders. Having too many credit cards is a sign of inadequate finances, indicating that the person might find it harder to repay their loans.
Co-signing on loans
This means pledging to repay the loan if the primary borrower fails to do so. This can be why many people carry lots of debt. Co-signers must know how serious their roles are and how these loans affect their credit scores as well.
Here’s more info about being a co-signer: https://www.bankrate.com/loans/personal-loans/im-a-loan-co-signer-what-are-my-rights/
Poor money management
People need to be familiar with what they spend their money on and ensure they use it wisely. The amount of money people spend on a good meal out, and the cost of gasoline to get there can make a massive difference to their credit usage and thus affect their credit score.
Never opening a new account
Opening an account is the first step in building up good credit, but opening too many accounts can mean that too many small loans will hamper a person’s scores, which will impact their ability to borrow money in the future.
Not monitoring their credit
It’s a bad idea for someone to just assume that all their financial problems will go away if they don’t look at them. People need to check their credit scores and their credit reports regularly so they are aware of what’s going on. You can check your credit reports for free by visiting: https://www.annualcreditreport.com/
Settling for bad credit cards
Experts advise against settling for bad credit cards because of seemingly intriguing offers. It may be challenging to get the good ones initially, but it’s much better than ending up in bad circumstances because of a poor choice. Make sure to always check the APR after the introductory period is over.
Falling for bad financial advice
There are so many people who claim to be financial experts, and it’s easy to believe them and follow their advice. People need to make sure they know what they’re doing before they start believing advice from anyone they find on TikTok or the Internet.
There are many ways a consumer can start building a great credit score. One way is by utilizing a free consumer credit counseling session. A certified credit counselor can help a person determine what exactly their problem is and help them develop a plan of action to fix the issue. They will set up a realistic budget and teach the individual how to use it to ensure they are using good money management habits. Once a person obtains an excellent or great credit score, it will benefit them on so many levels.