It can help you secure a mortgage, it can help you earn a lower interest rate on a loan, it can help you get a job, it can help you lower your car insurance, and more. The list goes on and on.
With that being said, there are many people out there who are ruining their credit score. Many don’t even realize they are doing it, and others don’t know what to do to reverse the damage they have already done.
Below are different ways you might be ruining your credit score:
Only paying the minimum payment.
I know someone who only pays the minimum payment on their credit card debt each month. Until I told them the truth, they actually believed that the minimum payment was all they needed to pay each month. They were proud of what they were doing, and they didn’t even realize that interest was building up each and every month because they weren’t paying the full balance each month.
You never want to only pay just the minimum payment unless your interest rate is at 0% and it’s in the terms that paying the minimum payment is all you need to do. However, with most credit cards, you will have to pay fees and interest charges if you only pay the minimum payment each month.
Paying the full balance on your credit card payment each month is your best bet.
Paying your bills late.
You always want to pay your bills on time. 35% of your credit score is all about your payment history. When you look at your credit report, it even lists whether or not your payments have been on time.
Paying bills late looks very bad and can drastically impact your credit score.
Maxing out your credit limit.
Your utilization rate plays a big factor when it comes to your credit score. Your utilization rate is how much of your credit you use. It is said you shouldn’t spend more than 30% of your available credit limit.
So, if your credit limit is $1,000, you shouldn’t spend more than $300 on your credit card. This means that maxing out your credit cards can really negatively impact your credit score.
Co-signing loans for others.
Co-signing a loan for someone might seem like a nice thing to do, but it is in fact very dangerous.
When you co-sign a loan for someone else, the loan you co-signed for then shows up on your credit score. So, if they pay the loan late or if they don’t pay the loan at all, then this looks badly on you and can affect your credit report and credit score.
How’s your credit score? Have you made any of the mistakes on this list?
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