Having good credit allows you to accomplish many things, such as purchasing a car or a house. If you have dedicated the time and energy to building up good credit history, make sure you are familiar with the common credit mistakes to avoid as they could ruin your hard work.
Co-Signing for Someone Else
If someone asks you to co-sign for something like a credit card or a loan, chances are, they do not have good credit to begin with. Everything related to the account will be reported on your credit report in addition to theirs. Charging too much, making late payments and various other credit mistakes could affect your credit rating.
Applying for Too Many Credit Cards
If you think signing up for that store credit card to get the extra 10% off your purchase is a good idea, think again. Many retail store cards are charge cards, not credit cards, and thus have no defined credit limit. This does not help your credit score as much as a regular credit card would. Also, every time you open a retail card your credit score is pulled. Having this done more than two times within two years will reduce your credit score. Too many cards also makes it seem like you really need to use credit, which is viewed negatively by credit agencies. Thus, applying for too many credit cards can do a lot of damage to your credit score.
Closing Accounts
Even if you work really hard to pay down or pay off a credit card, it is better to keep that account open and not use it than to close it entirely. If you only maintain cards with balances on them it can be viewed as you maxing out your credit limits, which can reflect negatively upon you and your credit score.
Common Credit Mistakes to Avoid
It takes a lot of time and effort to build up your credit score, yet all of that can quickly be reversed with some simple mistakes. By understanding what these mistakes are, you can avoid them and maintain a healthy credit profile. The above are just a few examples of common mistakes. For more detailed information or advice on rebuilding your credit, contact FIT Credit for a free consultation.