There are tons of mistakes that are made every day that have the potential to take you on a ride down the road to poor credit. From buying items you really want, but don’t really need, to exceeding your credit limit. Life presents lots of opportunities to begin down the slippery bad credit slope. By making yourself well aware of, and focusing in on, the more common mistakes rather than every possibility, you can truly internalize good credit habits and avoid these three major missteps.
1. Making Minimum Payments
Let’s start this off by saying that making a minimum payment will always be better than not paying at all. The common mistake that comes into play here is that many people choose to make only a minimum payment on their credit card when they have the ability to pay the balance off in full each month. Remember that there are interest rates with credit cards, and the longer you take to pay it off, the more interest costs you’ll accrue.
Think of it in the sense that, by trying to save some money right now by paying only the minimum when you could pay the full balance, you have the potential to end up paying more in interest than the original amount borrowed. Not such a smart financial choice when you look at the big picture, right?
Paying Late
This is probably the most damaging common mistake to your credit, since one of the primary factors taken into consideration is payment history. Even one late payment can show up on your credit report for up to seven years. That’s nearly a decade! Think about how much can change in that amount of time, yet a common mistake is keeping you trapped in the past.
Make sure your correct credit foot is forward and at least make minimum payments each month. It’s too easy to make a habit of paying late, because you’ll be paying for this common mistake for years to come.
Not Checking Your Credit Report
There is no excuse not to be checking in on your credit report from time to time. There are a plethora of free credit check options available to you nowadays, and the more credit knowledge you have, the better off you will be. Frequent checks are a great way for you to keep spending habits under control, as well as to be aware of any possible signs of identity theft.
It’s also important to check your credit report to make sure there is no missing or inaccurate information that comes back. Simple mistakes left uncaught could lead to you getting denied for an important loan in the future.
Remember that these are just the beginning, there are tons more mistakes that are just as easy to make as these major common credit conundrums.
