Common Mistakes That Can Sink Your Credit Score
There are many mistakes that people can make that can sink their credit score by a significant amount very quickly. Many of these common mistakes are things that people do not imagine will sink their credit score as much as it actually does. People that can manage to avoid these common financial mistakes may be able to keep their credit score in the higher range.
Not Securing Financial Information
One common mistake many people make that can dramatically sink their credit score is failing to keep their financial information secure. There are thousands of tricks that can be used to obtain a person’s financial account and pin numbers so that the thief can make purchases either in person or on the internet, having the items delivered to a different location to avoid detection. In many cases, the person will not even know that their financial information has been used until they receive their financial statement and find charges that they have not made or accounts that they have not opened. Although many protections have been added to protect consumers from unauthorized financial charges, if the charges are not discovered quickly, the person may be responsible for paying those charges.
Carrying Large Account Balances
Another common mistake that leads to a sunken credit score is carrying a balance on several credit cards from month to month. Paying off the balance of the cards each month reduces total debt by saving the person a great deal of money in interest payments and finance charges. This also shows the financial company that the person knows how to use their credit wisely, increasing the chance that they will be approved for credit line sinks and other types of loans at lower interest rates in the future. If the person carries a large balance on their credit cards from month to month, then their total credit limit is reduces and potential creditors may feel that the person is living outside their means.
Missing Payments
Many people believe that a single missed payment on their financial account will not have an affect on their credit, but the truth is that a single missed payment can sink their credit score dramatically. A missed payment will show up on a person’s credit report and can lower their credit score significantly, which will increase the cost of future credit products. Missing a payment on a financial account can also cause the interest rate for all of the person’s accounts to rise dramatically under the universal default clause that is present in many financial agreements. Making mistakes when using financial products can end up costing a lot of money so it is important to avoid making these common mistakes that can dramatically sink your credit score.
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