The Halloween season is upon us, but nothing is scarier than making these credit mistakes that could haunt you for the rest of your financial life!
We all make missteps with our credit that can drag down that all important credit score. Some can be fixed rather quickly, like running close to your credit limit or only making your minimum payments. Others can do some long-term damage. Here are some common credit mistakes to avoid that could batter your credit for years to come.
One or two late payments might get you a late fee. But for the most part, being a few days late will not impact your score too badly. Credit card companies are not required to report a payment as “missed” or delinquent until it is over 30 days late. Once you go past that mark and it gets on your record as a missed payment, it’s a bruise that can take a very long time to heal. A missed payment can knock a whopping 100 points off your credit score. It stays on your record for 7 years! If you think you will not make your minimum payment on time, contact your credit card company. Many are offering relief options because of the COVID-19 crisis.
Co-signing on a loan
You might think you are helping out a friend or relative by co-signing on a loan, but you may not be doing your credit any favors. Understand that if the person needs you as a co-signer, that means the banks considered them a bad risk for some reason or another. If they default, you will be responsible. Even if they keep their commitments, just being on the loan can raise your debt, lower your score, and impact your ability to borrow for your own needs.
Not checking your credit regularly
Sometimes all you need to do to make a credit mistake is simply to do nothing. If you do not check your credit score regularly you could be negatively impacted by wrong information. There are many services that offer free credit reports, so it is a good idea to check yours on a regular basis. A simple sweep for errors could raise your scores significantly.
What do you think of these tips on using your credit wisely? Any others you would add? What have you done to raise your credit scores? Please reply using the comments below.