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One of the most important lessons to understand about money is to maintain and protect your credit score, as it can influence many directions and decisions throughout your life.
“Your credit score is one of the most important numbers in your financial life. It goes a long way in determining whether you’ll be approved for a loan or line of credit and the interest rate you’ll pay.” Ted says Mr. Rothman, senior industry analyst at Bankrate.com, told FOX Business.
In addition to your credit score, which is taken into account to qualify for a mortgage or car loan, Rothman also considers other factors when opening a new account, such as your apartment rent, utilities and cell phone provider. I explained that my credit score might be checked.
“If you have a low credit score, you may be denied a loan or require a large deposit,” he said.
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With all of this at stake, protecting your score should be your top priority. Even people who have good credit scores or practice healthy financial habits sometimes make poor choices regarding their credit score. To avoid making such foolish choices, read more about what not to do.
Here are 6 stupid mistakes that can hurt your credit score
Co-signing a loan
Rothman said co-signing a loan is “potentially a very big mistake” because people don’t understand that this is a substantial legal obligation.
“If the other borrowers don’t repay, you’re stuck having to repay that money,” he says. “Your funds and your credit score are at risk. You’re not just guaranteeing someone or introducing them to them. You’re legally responsible for that loan. It should appear on your credit report just like your primary borrower.”
A man is working at home using a laptop. (image/image)
Applying for too much credit in a short period of time
This can be counterproductive if you open up a lot of new credit cards.
“Generally, it is recommended that you apply for credit at most every six months, and this is a combination of all types of credit,” Rothman said. “If your credit card is declined and you try again immediately, you will receive two declines and two difficult inquiries, which will negatively impact your credit score and may prevent you from presenting a new card.” .”
Not meeting statement deadlines
Set alerts to make sure you pay your credit card statements on time.
“With our time and energy being pulled in a million directions every day, it’s easy to inadvertently miss credit card payment due dates,” said Sarah Lassner, credit card expert at NerdWallet. . “If you’re late for more than 30 days, your credit score can drop significantly.”
Visa Inc. credit and debit cards arranged for a photo shoot on April 22, 2019 in Washington, DC. (Photographer: Andrew Haller/Bloomberg via Getty Images/Getty Images)
To prevent this, Rathner suggested logging into your account and setting up text or email alerts to let you know when your next due date is approaching.
“You can also set up automatic payments to remove that task entirely,” she suggested.
not paying all obligations on time
Ratner says it’s not just credit card or loan payments that can affect your credit.
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“Utilities, rent, and other monthly payments may be reported to the credit bureaus. Set reminders on your calendar for payment due dates so you don’t forget to pay,” she added.
I can’t monitor my credit
Get into the habit of looking over your credit report and bank statements so you can report any fraud as soon as possible, she said.
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“Signs of identity theft can be subtle, like an unexpected small charge, or as obvious as an account you don’t recognize opened in your name,” Lassner says. says.
Make it a habit to read your credit report and bank statements so you can report fraud as soon as possible. (image/image)
Spending to get rewards when in debt
Chasing rewards can be a slippery slope, especially if you’re in debt.
“The interest you’re paying on that debt can erase the value of any rewards you might receive in just a few months,” Lassner says.
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Instead of chasing every penny worth of points, she recommended considering getting a lower interest rate with a balance transfer card or personal loan.
“And pay down that debt as aggressively as possible to save hundreds in interest,” she said.
