Common Credit Mistakes And How To Avoid Them

What is credit? Credit is defined as the ability to borrow money or something of value now with the understanding you will repay the lender later with interest.

Managing credit well is one of the essential disciplines in your financial life. Developing good credit habits can enhance your financial health.

11 Common Credit Mistakes To Avoid

1. Not Paying Your Credit Card On Time

You are required to pay the minimum amount by the due date on your bill as a credit cardholder. If your household is like ours, you probably lead busy lives. To avoid being late in paying the required minimum, you should automate payments of all your bills, including your credit cards, through your bank account.

2. Carrying A Large Balance On Your Credit Card

Paying the minimum on your credit card bill on time is an easy fix and makes the card issuers happy. They stand to make a tidy sum on interest income at the high APR rate they charge their average customer.

3. Don’t Close Any Credit Cards

Even if you don’t use certain credit cards, don’t close these accounts. Often we have several credit cards that were once appealing because of certain features or through a favorite store. However, over time, you have lost interest and decide to close the account to worry about theft or temptation to use it.

4. Not Reviewing Your Credit Report Periodically

Current and future creditors use your credit report and review its potential impact on your credit score. Others that may want or need access to your credit report are landlords, utility companies, insurance companies, prospective employers.

5. Not Reading The Fine Print On Your Credit Agreements

Credit card agreements have incredibly complex terms and conditions. You should understand the particulars of the APR, penalty structure, the benefits from cashback, rewards, discounts, and other perks they are providing.

Creditworthiness is a valuable trait when you need to borrow money, or someone wants a good read of your character. Take steps to avoid common credit mistakes that will put you in good standing and help you raise your score.

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