A good credit score isn’t just important for securing loans. It can affect your ability to buy a car, get a mortgage, rent a home or start a business. Your credit score can even affect your employability. Unfortunately, even conscientious spenders don’t always have the outstanding credit they deserve due to making a few elementary mistakes.
Find out how consumers can dramatically improve their credit rating if they just avoided some common errors.
Failing to keep track of credit scores
According to Moneybanker, a digital loan provider platform, an all-too-common mistake is for consumers to neglect to maintain an awareness of their credit scores, and how their scores are affected by different financial decisions. But keeping track of your score is essential to maintaining good credit. If your financial choices aren’t improving your credit – or worse still, are causing it to deteriorate – you need to be aware of that so you can make the necessary changes
Closing out cards
If you don’t expect to use a card in future, you may naturally consider closing the account and getting rid of that card. Unfortunately, this can actually diminish your credit score. You’re sending a message to future lenders that you couldn’t trust yourself not to over-rely on your credit card and felt it necessary to close your account in lieu of exercising your own willpower.
Avoiding credit cards and loans completely
Superficially, this can look like a good idea. If you don’t have credit, you can’t damage your credit score, right? Wrong. To have a good credit score, you need to have a demonstrable credit history. That means taking out loans and paying them off responsibly; owning credit cards and staying on top of repayments. Credit is a part of modern life. There’s no reason to avoid using credit as long as you understand the risks.
Co-signing loans unwisely
When you have good credit, it’s natural to want to share your good fortune with friends and family. You may find yourself being approached by people in your circle who want to piggyback on your good credit. Be very careful, however. If you cosign a loan and your friends don’t keep up repayments, you may find that your credit gets damaged right alongside theirs.
It is advisable to maintain your credit card score by taking out credit responsibly. By only borrowing what you need and making timely repayments, you can enjoy the benefits of good credit throughout your life.