Four mistakes that lower your credit score

by , 06 November 2014

Are you worried because your credit score is unexpectedly low, yet you have no idea how it got that way? You may be guilty of having made certain mistakes along the way.

The following mistakes can negatively affect your credit score, so make sure you avoid them.

Mistake #1: Missed or late payments
 
Creditors will judge you on your ability to pay your bills on time. Missing even one payment can cause your credit score to drop. It’s recommended that you set up automatic withdrawals from your bank account, to avoid such occurances. Check your credit report whenever you get the chance.
 
Mistake #2: Having too many credit cards
 
If you own too many credit cards, creditors will be worried that you might not be able to repay the entire debt on time. It may also signal that you are too eager to get into debt and have no self-discipline when it comes to spending. Just remember that opening several new accounts over a short period will definitely hurt your credit score.
 
Mistake #3: Too many hard credit inquiries
 
Whenever you apply for new credit, a hard inquiry will appear on your credit report. If you have several hard credit inquiries, your credit score may drop by a few points. Potential creditors may see this as a sign that you are taking on too much debt and might refuse your application.
 
Mistake #4: Maxing out your credit cards
 
If your debt levels are too high and you’ve already maxed out a few credit cards, then your credit score will suffer. You will be considered to be a liability by potential creditors and will be refused credit in the future. Whatever you do, don’t max out your credit cards and always pay more than the minimum required.

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