Common Mistakes That Lead to a Lower Credit Score
A lower credit score can mean a lot of different things to a lot of different people. Sometimes, it can just mean that you're not quite as financially stable as you could be. But other times, it can mean that you're struggling to keep up with your bills and repay your debts. No matter what your reasons for having a low credit score may be, there are some common mistakes that people tend to make which only make the situation worse.
1. Missing or Delaying Payments
Bad credit can haunt you for years, impacting everything from your ability to get a car or home loan to the interest rates you’re offered. While it’s not always easy, one of the best things you can do for your credit score is to make all of your payments on time, every time. Unfortunately, missing or delaying payments is a common occurrence for many people. If you find yourself in this situation, don’t worry – there are steps you can take to get back on track.
2. Over-Utilizing Your Credit
Most people know that overutilizing your credit can hurt your credit score. But what does that actually mean? And how do you avoid it? In this post, we'll break down what overutilization is, why it hurts your credit score, and how to stay within your credit limit.
3. Having no Credit Lines
Your credit score is one of the most important numbers in your life. A high credit score means you're a low-risk borrower, which can lead to lower interest rates on loans and mortgages, and even qualify you for some jobs. A low credit score, on the other hand, can mean you'll have a hard time qualifying for anything at all.
4. Having Errors in Your Credit Report
Are you one of the millions of Americans who have an error on their credit report? If so, you're not alone. In fact, one in five Americans has a mistake on their credit report. And if you have a lower credit score as a result, it can be difficult to get approved for a loan or mortgage, rent an apartment, or even get a job. So what can you do if you find errors on your credit report? Here are a few tips. First, order your free credit report. Next, dispute any mistakes that you find on your report. Finally, wait for the results of the dispute process. If the mistake is corrected, your credit score should improve.
5. Closing Your Credit Facilities
If you have a lower credit score, you may be tempted to close your credit facilities. However, this is not always the best decision. In fact, closing your credit facilities can actually damage your credit score further and make it more difficult to get approved for future loans or lines of credit. If you're struggling with debt and are considering closing your accounts, speak with a financial advisor first to see if there are any other options available to you.
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