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How to Lose Control of Your Credit in 10 Ways

A good credit score is critical if you ever plan to apply for student loans, buy a car, or get a mortgage. Negative credit activity can affect your score in different ways. Here are 10 common mistakes that could potentially hurt your credit score:
1. Neglecting to check your credit report – It is important to check your credit report periodically to check for inaccuracies and fraudulent activity. If you find errors on your report, contact the credit bureaus and begin the process of amending them. They are required to respond within 30 days. Ignoring these mistakes could result in a denial of your future loan applications. Visit to check your free credit report today.
2. Making late payments – Your on-time payment history is the biggest factor when it comes to your credit score (35%).  That makes it extremely important to make your payments on time. A single late payment could ding your score by as much as 110 points! So the best thing you can do for your score is pay on time. However, mistakes happen. Explain to your lender the circumstances behind a late payment and they may look beyond it. >> See Listening & Lending!
3. Reaching your limits – Capacity is a heavily weighted factor in your score, and it refers to the amount of available credit on revolving debts such as credit cards. So maxing out cards will not only cost you a fortune in interest, but it can also destroy your credit rating. For best practice, keep balances under 30% (this can be calculated by adding your total credit card balances and dividing by the total credit card balance limits).
4. Closing credit cards – Believe it or not, closing your oldest lines of credit actually hurts your score by impacting your debt to utilization ratio. You are better off just not using a card after paying it off than closing the account completely.
5. Applying for more credit often – Every time you apply for a new credit card, an official inquiry is made on your credit report. Every inquiry made on your report is another opportunity to earn a point against your score.  Multiple inquiries may also indicate a credit history with mistakes and problems.
6. Staying debt-free – Nobody likes debt, but having even just a little shows potential lenders that you are a reliable borrower. By building a credit history and paying on time, your score with soar and lower rates will follow.
7. Cosigning for a(n unreliable) relative/friend – When you co-sign for someone, you are basically allowing them to borrow your credit standing and that agreement directly affects your score. Should this person default on the loan, it could be you that’s caught in the storm.
8. Avoiding creditors – Ignoring your debts is a terrible idea, but so is screening your calls. Communicate with your creditors, they may have the proactive approach to fixing your problems.
9. Using only revolving credit – While credit cards are a good way to build history, consumers with a mixture of revolving, installment (auto loans, personal loans, home equity products) and mortgages indicates that you have the ability to manage a variety of credit and other lenders are willing to lend to you.
10. Being careless with your identity – Anyone who’s had their identity stolen can tell you it’s not fun, so don’t be an easy target. Be careful of what personal information you share on social media and be weary of connecting to unsecure Wi-Fi networks. Change your passwords often and secure your smart phone with a passcode.
If you want to review your credit report or talk to someone about establishing credit, eliminating debt or consolidating it, schedule a meeting with a Member Services Consultant at 636.720.2400 or stop by a branch.
How to Lose Control of Your Credit in 10 Ways | West Community Credit Union Blog