When we go through life, the credit score we have can be the difference of getting approved for our loan, getting into our dream apartments or being forced to settle on a less-than-ideal one, or even being given consideration for certain positions. Therefore, it's essential to understand the common credit mistakes to avoid and how to fix them. This article will provide tips and tricks on how to fix the most common credit errors.
- Falling for Credit Repair Scams
Credit repair scams are tempting, but often they come with high fees for little or no results. Avoid these scams if you work with reputable agencies to repair your credit or improve your credit score.
- Don't ignore the benefits of credit cards
Many credit cards offer rewards and other benefits. Take advantage of these perks to get the most out of your credit cards.
- Why You Should Never Check Your Credit Report
Reviewing your credit reports regularly is essential to ensure there aren't errors or fraudulent actions. The three major credit bureaus offer free access to your credit reports once a yearly.
- Not Using Your Credit Cards
Not using your credit cards can impact your credit score negatively. Build credit by using your cards and paying them off regularly.
- A co-signer who does not have a plan
If you co-sign a loan without planning, it can lead to a financial crisis. Prepare a payment plan before you co-sign a loan.
- Closing old credit card accounts
Closing old credit card accounts can negatively impact your credit score. Keep your old accounts open if you want to build up a longer credit history.
- Late Payments
Paying your bills late is a common mistake that can hurt your credit score. Late payments can be recorded on your credit history for up seven years. Set up automatic payments to pay on-time.
- No emergency fund?
Not having an emergency fund can lead to missed payments and damaged credit. Build an emergency fund to avoid this mistake.
- Retail Store Credit Card Applications
Although applying for retail store cards may be tempting, they often have high rates of interest and fees. Do your research before applying for any retail store credit card.
You can improve your financial situation by avoiding common credit mistakes. Not only can you get better interest rates and qualify for more loans, but your financial position will also improve.
Common Questions
What is considered a good score for credit?
A good credit score is typically considered to be 700 or above.
How often do I need to check my credit score?
You should check your credit score at least once per year.
Can paying off a loan early hurt my credit score?
Paying a loan off early can help improve your credit rating by reducing the credit utilization rate. It also shows creditors that you're a responsible borrower.
Can I improve my credit score quickly?
It takes time to improve your credit score, but you can see the results in a few short months by paying off your debts and fixing errors on your report.
What should i do if a mistake is found on my credit report?
You can dispute an error you find on your credit file by contacting the credit bureau responsible for the error, as well the lender who supplied the incorrect information.