By: omunoz
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6 Harmful Habits for your Your Credit Score

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A credit score is a number used to evaluate the creditworthiness of consumers, and it’s based on their financial history. Banks use this score to evaluate the ability of an individual to pay a debt.

A credit score has a range between 300 and 850, and the higher it is the more chances you have to access credit with good terms and optimal interest rate. But some behaviors, actions, and habits can lower your chances of getting a loan. The followings are six habits you must avoid if you don’t want your credit score to decrease.

What has a negative impact on my credit score?

1. Falling behind your payments

Your payment history is the most decisive factor on your credit score. That’s why you must avoid at all costs being late on your debt payments. Even only one late payment can affect your credit score. If you are late on one of your payments, the delay will show up on your credit report for up to seven years.  

2. Opening too many credit lines at once

It’s not a good idea to open too many lines of credit at once, especially if you don’t have a long credit history. This behavior indicates lenders that you have financial problems and you’re desperately seeking money to solve them.  

3. Closing an account

If you have finally paid off a credit card or you have one that you’re not using anymore, closing this account may seem the right choice. Unfortunately, eliminating one account can lower your credit score. When you do so you reduce the total amount of credit available to you, and this affects your credit use rate. Also, your financial history can be compromised if you close off old accounts because these can prove that you have been financially responsible with your payments for a long period of time.

4. Avoiding credit

If you avoid any type of credit in fear that you’re going to be in debt, you won’t create financial records, and you will reduce your possibilities of accessing a loan when you need it. The good news is you don’t need to overspend or fall into debt to build your financial history. If you use a credit card for some of your monthly expenses, like your phone, gas or food, and if you pay them on time, this will build your credit history.

5. Depending exclusively on your credit cards

Applying for and actively using a credit card can help you establish a good credit history, but this is not enough to get a high credit score. Those with auto loans, mortgages and other types of debt get a higher score than those who only use credit cards. This is because 10% of your credit score depends on different lines of credit since this information is used by lenders to know you’re capable of managing several types of credit simultaneously.

6. Ignoring your credit reports  

Failing to check your credit report is one of the worst financial mistakes you can make. Make sure to check this information on a regular basis and look for possible mistakes that could affect your credit score. Annualcreditreport.com is a website where you can request your report from the three credit bureaus in the US, at no cost. If you find inconsistencies when reading your report, you must report them to the Bureau of your choice.  

It takes time to get a good credit score. Make sure you don’t spoil your credit score making any of the mistakes above.

Do you have any advice to improve your credit score? Share it in the comments section!

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