There are plenty of effective ways to ruin your credit if you aren’t careful. A lot of people don’t realize that what they are doing is taking a very real and negative toll on their overall credit rating. If you want to maintain good credit for the long term, it is important that you learn about some of the worst mistakes to avoid. The worse your credit gets, the more difficult it will be to get a loan for a car, house or anything else you might need in the future.
1. Getting a Credit Card Too Young
If you get a credit card when you are too young or not ready, you can do quite a bit of damage to your credit. While it is true that you can’t get a credit card if you are 18 years old, it is possible to get one if someone co-signs on your behalf. Opening up a credit card when you are too young and immature can lead to serious financial problems. You should feel completely confident in your ability to handle such a big responsibility before making this decision.
2. Acquiring Multiple Credit Credits at One Time
Getting numerous credit cards within a very short period of time can also be bad for your credit. This is also an indication that a person isn’t responsible enough to handle a credit card properly. If you are still young, there is probably not a good reason to have more than one card. In fact, most people with multiple credit cards don’t really need all of them. Think twice before you keep applying, because you could end up damaging your credit in a big way.
3. Not Paying Your Bills on Time
Neglecting your credit card payments and other bills can quickly lead to a declining credit score. It is crucial that you make a point of making these payments on time so that you can avoid suffering serious consequences later on. Ignoring your credit card bills will only compound the interest, putting you into a spiralling pit of debt. Once you are in debt, it can be very difficult to get yourself out. One of the best ways to avoid this is to set up automatic payments so that you don’t forget or put off paying your bills when they are due.
4. Letting Other People Use Your Cards
You should never let anyone you don’t completely trust use your credit cards. While you might be tempted to help out a friend in need, you shouldn’t count on them paying you back. This is one of the biggest mistakes that people make with their credit cards.
5. Co-Signing for the Wrong Person
You probably wouldn’t lend money to someone who is responsible, so it therefore doesn’t make any sense to co-sign a loan or credit card for them either. If someone asks you to be a co-signer, you should definitely think twice before agreeing. If the person fails to pay the money back on time, you will be on the hook for their debt. This can quickly put you in a very bad place financially, and it can trash your credit for a long time.
6. Being Careless with Personal Information
If you aren’t careful about protecting your personal and financial details, you could become the victim of identity theft. Thousands of people throughout the UK have their credit negatively affected because of this mistake each year. There are lots of ways to ensure that your information stays safe, such as never shopping on websites that aren’t completely secure. You should also never give your credit card number or any other sensitive details to people you don’t trust.
7. Failing to Pay Back a Loan
Those who take out a loan and do not pay it back are just asking for their credit rating to plummet quickly. Getting your car repossessed or home foreclosed on due to non-payment can be devastating to your finances as a whole. Before you decide to take out a loan, make sure you can pay it back.
8. Not Checking Your Credit Report
Everyone should make a point of checking their credit report at least once each year. Take a close look at your report to make sure there aren’t any mistakes that need to be corrected. You might have to pay to get a copy of your report, but it is well worth it.
If you want to keep your credit score as high as possible, you need to make an effort to avoid all of the mistakes listed above. Some of these mistakes are very easy to make, but they can have hugely negative effects on your credit and finances. The more conscientious you are about these things, the more likely you will be to maintain a healthy credit rating.