Posted On: 31-March-2022


Your credit score is the main indicator of your financial health. Therefore, it is important for you to develop a good and healthy credit habit in order to maintain a good credit history or credit report. Just as important as it is it is also important to avoid common credit mistakes that can hamper your progress and damage your credit score. Thus, you must know what are the factors to avoid while maintaining your credit score. This will give you a better chance of achieving your credit goals. Thus the 5 common credit mistakes that you and everyone should avoid are:

1. Not Checking Your Credit Score Often

To keep a check on something is always important to make progress as well as to avoid future problems. Checking on your credit score is a good way to not only keep a track of your progress but also to spot financial issues and address them before its late. It is up to you to check your credit report as well as credit score as many times as you would like. As you review your financial health keep a check on the items that carry the potential to hurt your credit health so you can address them quickly.

2. Not Paying Bills On Time

How you have been paying your bills contributes largely in deciding your credit score. Even if you have missed paying just one payment on time it could largely affect your credit score. You still can pay for your missing payment within the following 30 days, but if you fail doing that within 30 days only then would it affect your credit score. Thus it shouldn’t be a difficult task for you to pay on time. Just one late payment would show in your credit report for the next 7 years. To be able to pay bills on time without delay you could ask your lender to send you payment reminders or you could set up auto pay through your lender or bank account. You must ensure that your bank has enough money to pay such bills.

3. Only Making Minimum Payments On Your Credit Card

When you pay just the minimum amount due on your credit card that comes with an interest rate will cost you even more money in the future. It also holds the ability to damage your credit score.

4. Applying For Multiple Credit Cards

Every time you apply for credit cards your bank or your lender will check on your credit or loan history. This helps them in deciding whether you are eligible for loan approval or not. When you apply for multiple credit cards at once each will run individual enquiry which will be counted as one. Multiple enquiries could affect your cred score and cause the lenders to think that you’re a risky borrower. To avoid damaging your credit score research about credit cards and then decide which one is the best fit.

5. Taking Unnecessary Credit

If you see there are so many loan options in the capital market and if you tried may be you could have got them all. For instance, you may take out student’s loan and use it for another purpose. This does happen but these could put a strain on your budget, it will also increase how much you owe which could impact your credit score negatively. Therefore, you must not apply for credit card when you do not need it and vice versa.