How many credit mistakes have I made in my life? Plenty. Missed payments, continued missed payments, not monitoring my credit, carrying balances that are too high…fixing all that can feel daunting at first. In fact, it can feel like an unattainable goal but I learned to ignore that feeling and press on.
Are you making credit mistakes that can cost you more money than you should be paying? There are some very simple steps you can take that will keep you from wasting money on interest fees, late charges, and lowering your credit score.
Some of these tips may sound like Credit Repair For Dummies 101, but you may be surprised to learn that many consumers get caught up in these mistakes and sometimes through no other reason than having too many other pressing obligations.
Neglecting these issues can hurt your credit over time. If you see your own credit mistakes here, do not fret about having made them–instead, focus some time and energy on correcting the problem so you can sleep easier at night knowing you are in charge of your finances.
Credit Mistakes: Not Paying On Time, Every Time
Your credit score is negatively affected when you miss a payment. Even ONE payment missed hurts your FICO score.
The good news is that when you set up auto pays and dedicate yourself to NO missed payments, it only takes about 12 months of consecutive on-time payments to make a real difference in your creditworthiness. The longer your history is, the better but a 12-month goal is the best place to begin.
Credit Errors To Avoid: Not Monitoring Your Credit
Once you get your payments under control and understand that even one “late or missed” is a bad deal for your credit, you can begin to focus on your overall credit picture. Start monitoring your credit and get intimately acquainted with your credit report. This is the key to long-term credit repair. You don’t need to pay a third party to fix your credit, you can do it yourself for free.
Credit Mistakes You Should Never Make: Carrying The Maximum Balance
Don’t carry the maximum balance on any credit account. This affects your credit utilization ratio which is something very important when calculating your FICO scores and overall creditworthiness.
A lender or credit card company may choose not to issue a credit to a consumer who carries consistently too-high balances (below 50% is a good goal, 30% or less is ideal) and has multiple maxed-out accounts.
Credit Mistakes: Junk Credit
Don’t waste your time and money applying for high-interest credit cards–those big interest rates add up over time and low-quality credit accounts may actually hurt your creditworthiness in the end either due to balances that creep higher over time (usually due to the higher interest rates), late payments on nuisance debt, etc.
Credit Problems To Avoid: Only Paying The Minimum
Never pay just the minimum on your credit card accounts. This keeps you paying more in interest fees over time and prolongs the amount of time you will spend paying down that account.
Some will choose to make exceptions to this rule when trying to pay off one particular account; they may pay the minimums on all other accounts until their “target” account is paid off, then move on to another account to pay down in the same way,
Joe Wallace is a writer and editor from Illinois. He was an editor and producer for Air Force Television News for 13 years, and has served as Managing Editor for publications including Gearwire.com, and Associate Editor for FHANewsBlog.com. He is also an experienced book and script editor specializing in non-fiction and documentary filmmaking.