November 7, 2021
5 Common Credit Mistakes to Avoid
Using credit can be a helpful tool but make sure to skip these bad habits.
Having an above-average credit score can qualify you for better mortgage and loan rates, credit cards, housing, and insurance rates. By knowing these five tips you can easily maintain or improve your score.
Closing and opening cards too often
It is important to know what can negatively affect your credit score. The average length of time that you have a line of credit is a factor, and having a card open for the long term counts positively toward your score. By keeping a card open for the long term and not opening too many new accounts within the same amount of time you can improve your credit score.
Credit utilization rate is too high
When making payments on time, your credit record is benefitted. However, if you maintain a high balance on revolving accounts your credit can be negatively impacted. Lenders may think that a borrower who has a large credit balance is more likely to default.
Not checking credit often
It is important for your account security to check your account status. Identity theft and fraud will negatively affect your account even if you are unaware of it. Investing in a credit monitoring service can help you keep tabs on all your account activity and track your credit score.
Missing payments
Missed payments are one of the most obvious marks against your credit score, but did you know that they can cause a subprime credit score that can be on your record for up to seven years? By making the minimum monthly payment on time every month you can avoid this negative record and late fees too.
Nonexistent credit history
No credit history can be an obstacle for loans and housing just as much as a bad credit score can be. One of the quickest ways to build credit is to become an authorized user on a friend or family member’s credit card. However, make sure that the cardholder has no debt or missed payment history which will decrease your score. You can also use credit-building tools for a fee that connects to your bank account and builds credit from rent payments, utilities, streaming services, and cell phone bills.
Visit your local Citizens First Bank for advice on the right credit card for you. Our experienced team can help you improve your credit score and be on the right track for financial success.
