This is a guest post by Steve from Money File. Since I don’t ever suggest using debt as a tool for acquiring assets or building a business, I don’t often talk about credit (or a credit score rating for that matter). But, if I did not have good credit, I would not have been able to purchase our house last week. So, for this purpose, it’s a good idea to keep an eye on your credit score.
10 Ways to Ruin Your Credit Score Rating
This post contains affiliate links.
Obtaining credit is something that most of us will need to do at some point, whether it is for:
- a mortgage,
- to purchase a car, or
- simply to pay for a holiday or other major purchase.
Managing our finances is not something that all of us are good at, and it is all too easy to find you have made serious injuries to your credit score rating! Paying attention and remembering the following simple tips will help you to keep your rating intact.
1) Late and Missed Payments
You have a certain amount of time to make the minimum payments on your cards. Make sure you pay them all on time as late payments or missed payments can result in damage to your credit score rating.
County Court Judgements are made when you do not respond to reminders for payment, and are a serious problem where your rating is concerned.
3) Third Party Usage
Don’t allow others to use your card as even your closest family or friends may find it easy to abuse your generosity, resulting in bills that are beyond your control.
4) Exceeding the Limit
Your card will come with a credit limit; keep within it or you incur charges and reduction in your standing.
5) Mortgage Default
If you have a mortgage make sure it is paid on time, every time, or you will certainly have problems with your credit score rating. And, in the extreme case, you may lose your home.
6) Unpaid Accounts
This is taken very seriously by credit companies, especially if the borrower refuses to co-operate. If you find your circumstances change, inform the lenders immediately as it is in all parties interests to work together to resolve the problem.
7) Fraud and Inaccurate Information
Never use another person’s name to get a credit card, loan or mortgage as both of you will find your credit score rating ruined when the fraud is uncovered, and maybe even worse!
8) Consistent High Balance
The best way to keep your rating intact and healthy is to pay off as much as you can each month. Those who keep the balance on cards at the highest level and only pay a small amount find they are not accorded a rating as high as it may have been.
9) Excessive Applications
If you are applying for credit all the time and constantly being refused you are damaging your credit limit.
10) Poor Budgeting
A general point this may be but it is an important one. We should all be aware how much money we have coming in each month, and remember that a credit card is not an extension of this. You need to be able to meet the repayments!
How About Your Credit Score Rating?
Credit is an excellent and convenient method of advancing your spending power, and your credit rating is one of the most important aspects of your life. Guard it carefully and build it up, and you will be able to rely on it for the rest of your life.
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.