We don’t all have a good credit score – many of us, often because of bad life decisions, will have a credit score that could be described as poor. This sucks, as it can determine certain aspects of your life. Employers can take it into consideration before the interview stage, landlords can turn you down when applying for an apartment, and banks and other lenders will either refuse to give you a loan or charge you higher rates.
Now, there are things you can do today to improve your credit score, so don’t assume your life is ruined because of it. However, it’s worth considering how you got a poor credit score in the first place, or looking at ways to avoid getting into that position if your credit score is currently a good one. You see, the following are some of the mistakes people make – you may be guilty of a few of them yourself – and while you don’t need to obsess over them too much, you still need to learn from them, or take steps to avoid them happening to you.
Mistake #1: Missing your loan/credit card payment date
Forgetting to make a payment is something most of us are guilty of, and provided it’s a one-off, your credit score won’t be badly affected. However, if you are guilty of missing payments regularly, they will eventually count against you. Do yourself a favour, and automate your payments through online banking, or mark clearly on your calendar when payments need to be made.
Mistake #2: Maxing out your credit card
Now, getting a credit card isn’t necessarily a bad thing. Provided you make the monthly payments, you are actually strengthening your credit score. However, by treating it as free money, and maxing it out without making the payments due, you are going to sabotage your credit score. You will land yourself in debt too.
Mistake #3: Taking out further loans to pay off debts
So you have maxed out your credit card, and you now have creditors knocking at your door. If you are in a financial jam, you may be tempted to take out a further credit card or loan to pay off your previous debt. This will go against your credit score, as official inquiries will be made on your credit report as to why you are taking out the loan. The only reason to take out another loan is to consolidate your existing payments, making it easier for you to get out of debt and get your score back on track. Check out the bad credit loans from Evolution Money, as an example of one avenue available to you, or shop around local banks and credit card companies for low or zero-interest options.
Mistake #4: Not checking your credit score report
You may not have made any mistakes affecting your credit score, but there may still be inaccuracies on the report that are bringing it down. You will realise something is up when you have difficulty taking out mobile phone contracts and the like, so you need to monitor your report to ensure there are no errors showing up. If there is, don’t ignore them. Dispute the inaccuracy with the agency involved, and assuming you weren’t at fault, your credit score will be amended accordingly.
Don’t be stuck with a bad credit score. Avoid the mistakes mentioned, and focus on good money habits on a daily basis. Speak to your local debt-relief agency and money services for further advice.