Keeping your credit score up should be a main concern of today’s adult. By keeping your credit score high, you won’t face problems in the future when you want to buy a house, a car, or get a personal loan. However, there are many ways to ruin your credit. To make it easier on yourself, avoid the following aspects that can potentially ruin your credit, and subsequently, your life.
Applying for Many Loans or Credit Cards
Image via Flickr by 401(K) 2013
Most people are unaware that every time you apply for a credit card or a loan of any kind, that the company offering the loan pulls your credit score. It doesn’t seem harmful until you realize that getting your credit pulled is one of the aspects that make up your credit score. If you continuously apply for credit cards, the amount of times your credit score is pulled is going to make your credit score drop considerably.
While some cases of identity theft are not the fault of the victim, there are precautions you can take to make sure this doesn’t happen to you. Essentially, sensitive information, namely via the Internet, is captured by the thief. He then uses your good name and credit score to apply for credit cards and loans that you are unaware of. The thief then maxes out the cards and never pays them back, destroying your credit in the process. To avoid this, never leak information on unsecured networks. To go the extra mile, try usingto ensure that this never happens to you.
Not Checking Your Credit Report
Every year, the 3 big credit agencies, Experian, Equifax, and Transunion, allow you to get a copy of your credit report for free. Don’t ignore this opportunity. By checking your credit report, you can become aware of any outstanding bills that you may owe, or ones that you don’t know about. Errors can occur on these reports, so be thorough when you review your credit report.
Not Using Credit Cards
It sounds ridiculous, but not using your credit cards can actually hurt your credit. Credit card companies report your usage to the credit reporting companies based on your outstanding balances and credit card use. If you close your credit card accounts, it can often hurt your credit. Instead, make sure that you keep your credit cards open; just use them sparingly. It will keep your credit score in order.
When you apply for a credit card or loan, the lender takes a look at your debt-to-income ratio, as well as your debt utilization ratio. If you run high balances on a frequent basis, this can make your ratios unattractive. Even if your credit score is high, lenders won’t ignore this aspect. Make sure to pay off a bulk of your balances on a monthly basis.
Even if you have bad credit, you can recover. The road back to good credit is long and arduous, but by following these steps, you can put yourself in position to succeed. The best way to keep good credit is to live inside your means. That way, you can have money left for the future and even save a bit.
Jessica Snow is a young writer from sunny Florida who enjoys learning and writing about a myriad of topics. When shes not glued to her laptop you can find her running the trails with her Great Dane, Charlie.