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Your credit report is the most important criteria that lenders use to determine your ability to manage money and payments. Your credit score is calculated by the credit reporting agencies on the basis of your past credit transactions.

Common Credit Mistakes:

Your credit score and report hold a lot of importance but there are a few common mistakes that people make, resulting in a bad credit score. Most of the time people fail to realize these mistakes.

• Payment Of Monthly Minimum Due: There is a misconception that you can improve your credit score if you pay just the minimum due amount on your credit card. Payment of the minimum due amount has a marginal effect on the score.
• High Interest Loans: People make the mistake of applying for risky loans with a high interest rates without realizing that such loans cannot help in increasing their credit score – in fact, they often have the opposite effect.
• Credit Card Cash Advances: Withdrawing cash from your credit cards and exceeding your limits can also affect your credit score. Cash withdrawal from your credit card will result in extra fees and high interest rates. Exceeding the limits of your cards will also result in an over-the-limit-fee.
• Applying For Several Loans At A Time: Applying for multiple loans at a time is another common mistake people make. Every time you apply for a loan the lender performs an inquiry of your credit history. The credit agency is notified every time such an inquiry takes place – too many inquiries are a red flag to creditors and actually make your score go down.
• Closing Credit Card Accounts: People tend to close a credit card account that they do not use, thinking that this will not affect their credit score, but the fact is that you can hurt your credit score by closing old accounts. If you have a good credit history and you close your account, then potentially you have less credit available, but your balances remain the same.  Can you see the connection here?
• Late Payment Of Bills: Your credit report will definitely reflect a negative credit score if you make late payments. Your creditors report every time you make a payment. If they report a late payment, then this will have an adverse effect on your credit score.
• Lack Of Communication With Creditors: If you are having trouble meeting your financial obligations, you must communicate this with your creditors.  Often they will agree to payment arrangements, helping you avoid a negative mark on your credit.

How To Avoid Credit Mistakes:

Try to use your credit card occasionally and pay the full amounts of your bills so that it helps to boost your score. Keep checking your credit report time to time so that there are no errors in the report that may hurt your credit score. You can also try our credit monitoring service free for 7 days, and get your credit score free!