Our credit score is often the difference in getting a loan approved or not. It can also be the difference in landing our dream apartment, or having to settle for one that's less desirable. Or even being considered for some jobs. It's important to know how to fix credit mistakes and avoid them. This article will 9 the most common mistakes in credit and give practical tips to correct them.
- You can't get too much credit at once
Multiple credit applications in a short period of time may damage your credit rating. This mistake can be avoided by spacing out your credit applications.
- The Problem of a Co-Signer Without a Plan
A co-signer who does not have a plan in place can land you in a bad financial situation. Be sure to have a backup plan for payments if you are co-signing the loan.
- No emergency fund?
Missed payments and credit damage can result from not having an emergency reserve. Create an emergency fund and avoid this mistake.
- Retail Store Credit Card Applications
Applying for retail store credit cards can be tempting, but these cards often come with high-interest rates and fees. Do your research before applying for any retail store credit card.
- You Should Check Your Credit Report
Reviewing your credit reports regularly is essential to ensure there aren't errors or fraudulent actions. You can access your credit report for free once a year from each of the three major credit bureaus.
- Credit Repair Scams to Avoid
Credit repair scams might be tempting, however they are often expensive and produce little to nothing. Avoid these scams through working with reputable credit agencies or by improving your credit rating on your own.
- Closing Old Credit Card Accounts
Closing an old credit card account can impact your credit score negatively. Keep older accounts open to improve your credit history.
- Don't ignore the benefits of credit cards
Credit cards are often accompanied by rewards and benefits. To get the best out of your card, take advantage of these benefits.
- The Balance Transfers: Don't Miss Out
Balance transfers can help consolidate your debt, but there are also fees and high interest rates. You should pay attention to any terms associated with a balance transfer offer.
By avoiding these common credit mistakes and taking steps to improve your credit score, you can put yourself in a better financial position. Not only will this help you qualify for loans and better interest rates, but it can also improve your overall financial well-being.
Frequently Asked Questions
What is a good credit score?
Typically, a credit score of 700 and above is considered good.
How often should I check my credit report?
You should check your credit score at least once per year.
Is it possible to damage my credit rating by paying off an early loan?
Paying a loan off early can help improve your credit rating by reducing the credit utilization rate. It also shows creditors that you're a responsible borrower.
Can I improve my credit score quickly?
The process of improving your credit score can take time. However, you can make progress in just a few months by settling debts, and repairing errors on your reports.
What should I do when I find an incorrect credit report?
You should contact the credit bureau that reported the error as well as the lender who provided the inaccurate information if you find an error in your credit report.