When you reach the age of eighteen, having a good credit score is very important. No matter which town you rent in, property managers and landlords will invest a lot of time and money in determining your capability in making timely rent payments. Some of us have no idea why we have low credit scores despite playing it safe and paying your credit card bill on time. There are some pitfalls you might not know that may be contributing to your credit score.
Below are the 5 credit score pitfalls you should start avoiding.
1. Making a lot of inquiries
When you are shopping for a new car or house, you should carefully choose a bank to be your credit provider. Prior research will allow you to find the most suitable rate for you. This will help you save a lot of money. While you plan on saving, it is highly encouraged to embrace moderation. Each time you get a quote, lenders will make detailed inquiries that will be recorded as part of your credit report. When shopping for a credit or a loan, collect your quotes within a short time span.
2. Be careful of the little things that always add up
If you have forgotten about unpaid bills and expenses from several sources, this can affect your credit score negatively if you don’t clear them up on time. Simple things like a medical invoice, library late fee that was supposed to be paid ten years ago are some examples. What if the library or the hospital decides to turn the account over to collections or decides to mark it as a delinquent account? Request annual credit reports so that you will be able to fix all of your forgotten outstanding payments.
3. Incorrect information
Incorrect information can cause your potential loan provider to be skeptical about giving you a loan. While errors will most likely occur, the presence of any incorrect information on your credit report, especially information related to financial records, could seriously drag your credit score to the mud. Get your credit report early, in case you can liaise any incorrect information with the credit bureau, then file a claim. Even though the correction process will be long and tedious, it’s worth it.
4. Using your credit cards excessively
Limit the number of times you use your credit cards to pay off daily expenses. Even if you make timely and responsible payments, it’s good to make sure your credit utilization ratio is very low. Don’t fully exhaust your credit card (for example, charging $999 on a credit line of $1000. This is the easiest way to earn a black stamp on your credit report or score. Make sure you have low balances on the lines of your credit.
Do you have a question about your credit score or loans? Click here to contact the Kolesar Team today!