Naturally, you want a high credit score. However, you might not be aware of some of the mistakes you’re making that could be negatively impacting your credit. Read on to learn about 4 common credit errors you’ll want to avoid:
1. Not Checking Your Credit ReportIn the past, it used to be very tedious to obtain your credit report from all 3 credit reporting agencies. Today, there’s no excuse. With AnnualCreditReport.com, you can view all 3 of your credit reports once a year for free. This allows you to see if there are any errors or suspicious activity on your reports so you can quickly rectify mistakes or have your credit frozen. Related: How to handle credit report errors
2. Paying Just the Minimum. Sometimes people will charge more than they can afford to earn credit card perks, thinking that they’ll just make the minimum payment on their credit cards each month. Yet be aware that if you charge $2,000 on a credit card with a 20% interest rate—and then pay the monthly minimum—you’ll ultimately pay $4,240 over 15 years. As you can see, those perks aren’t free! Spend within your means and plan to pay your credit cards off in full each month.
3. Applying for Lots of Credit.
Each time you apply for credit, an inquiry is recorded in your credit report. Too many inquiries in a short period of time have a negative impact on your credit score. Instead, ask yourself whether you really need the credit and if you do, consider contacting one of your current credit card companies to request a higher credit limit. Related: Will not using your credit card hurt you?
4. Not Using Your Credit Card.
Many people believe that they’re developing excellent credit by obtaining credit cards that they don’t use. Not so! Unfortunately, you need to borrow money to show that you’re a responsible borrower. Try to use your credit cards once a month for minor purchases or small reoccurring expenses like Netflix. This will not only help you establish a payment history, but it will also boost your credit score.