5 Dangerous Habits That Can Completely Ruin Your Credit

5 Dangerous Habits That Can Completely Ruin Your Credit
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    If you are trying to keep your financial life on track, it’s important to stay away from bad habits that could harm your credit rating.


You’ll know your credit score is important when you walk into a bank and you can’t get a new loan or credit card approved.

So here are some dangerous habits you might be engaging in that sabotage your credit score.

1. Having a high debt utilization ratio

This happens when you use your credit card to charge everything until the amount you owe is almost reaching the card limit (even if you pay the whole amount on time).

Credit card companies don’t expect you to use all the available credit every month but when you do, you get a high utilization ratio which can sabotage your report just as missed payments. Using 30 percent to 40 percent of the available credit is usually recommended.

2. Failing to review your credit reports regularly

Everyone is entitled to a free credit report once annually. Checking your report on a regular basis allows you to know what you’re doing right or wrong and the areas that need improvement. It also helps you to take note of errors in your report that could damage your score and have them corrected quickly.

3. Credit card debts that begin early in life

Records of missed and late payments can stay on your credit report for over 6 years. When you start racking up credit card debts earlier in life, it becomes harder to secure loans in later years.

Your past credit history is just as important as your present when determining credit worthiness. It’s important to engage in good spending habits from an early age.

View this quick guide on maintaining and keep your credit history strong. It will be helpful whenever you need to finance a major purchase or decision.

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4. Applying for too many new credit cards

Making new credit card applications every other time could ruin your credit score. Whenever you apply for a new card, the issuer puts in an official inquiry on your report. This can be used by the agencies to undermine your rating.

As a rule of thumb, you shouldn’t open additional cards three months prior to applying for a mortgage.

5. Bouncing checks

Financial institutions usually report a series of bounced checks to the collection agencies. Don’t write a check unless you’re certain there’s adequate funds in the account. Bouncing checks can compromise your ability to obtain credit in future.

6. Co-signing a credit card

Any loan you co-sign will have an impact on your credit report. The status of the loan will be included on the report. If the co-signee has a habit of late or missing payments, it will be reflected in your report and have an impact on your rating. On top of that, you will be required to pay off the loan if the co-signee defaults.

As you can see, ruining your credit score is easy but improving it takes years of hard work. Even small and seemingly arbitrary financial decisions can eventually affect your credit score.

Whether you’re trying to own a home, apply for a new line of credit or start a new venture, avoid these 5 mistakes that could ruin your credit rating.

Share this information and help your friends keep their credit score in check.

Link: http://www.thefiscaltimes.com/Articles/2014/03/24/5-Easy-Ways-Ruin-Perfect-Credit-Score


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Categories: Credit Management

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