Common Mistakes That Can Ruin Your Credit Score

Poor credit history can make life difficult when it comes to applying for a loan or credit card, in future, as creditors will be hesitant in issuing credit considering it to be a risky and bad investment. If you want to build a strong credit history, below are some bad habits to avoid.

Delay in making payments

To build a robust credit history and maintain healthy credit scores, one of the most important factors is maintaining a regular past payment history. Whether you have a car loan running or an existing credit card, the first step towards making your credit history better and improving chances of obtaining a credit card is to stick to payment timelines o

f any existing loan or dues. Unchecked spending

Having no control over expenditure and the habit of owing a lot of money on existing credit cards can be a fatal mistake that spoils your credit scores. It not questions your ability to repay, but is also an important data point that creditors use while evaluating your credit card application or loan approval requests.

One way to rebuild credit history is by limiting your financial spending to a fixed amount per month. Remember, the more you use your credit card, the higher the dues will be, which in case of delay or non-payment, can negatively impact your credit score.

Not maintaining a healthy Credit Utilization Ratio

One of the important rules of credit card spending is maintaining a healthy Credit Utilization ratio at 30% or less of the total available credit limit.  Not only does it build your credibility in the books of creditors, but it also keeps your finances under control.

Having Multiple Credit Cards

However tempting the offer to sign up for a credit card is, owning multiple cards may be a big mistake. It can be detrimental to your credit scores. Creditors will question your ability to repay.

Searching for Credit or Credit Inquiries

This is another common mistake to avoid as it can severely hurt your credit scores. A credit inquiry is nothing but the section of the credit report that keeps an account of how many times the credit card report is pulled and for what purpose. Credit inquiries can hurt your credit score as it shows your desperation for credit.

If you avoid these common mistakes, you can build a hood credit history and will never have trouble of getting loans approved.