Nearly everyone make credit mistakes at some point in their lives. These mistakes are often performed without you thinking about them and can take very little effort on your part to cause significant damage. Credit mistakes can drop your credit score by a considerable amount and it could take years for you to repair the damage done. The best way to avoid this fate is to learn the common credit mistakes that most people make and avoid performing these actions at all costs. Here are some of the most commonly seen credit mistakes and how to avoid them.
Requesting A Lower Credit Limit
Although it may seem like a good idea to request a lower credit limit if you pay off your credit cards every month or carry a low balance, making that request can severely damage your credit score. Part of the calculation for your credit score is the amount of credit you have available to you versus the amount of your credit you are using. If you lower your credit limits, you close the gap between what you are using and what is available, which lowers your credit score.
Closing Old Credit Cards
If you are not using one of your credit cards, you would think that it makes sense to close out the account. After all, if the account is closed you do not have to worry about the account information falling into the wrong hands and being used by criminals. Unfortunately, closing out these old accounts can harm your credit score by reducing the length of your credit history and reducing the amount of credit you have available to you. If the credit card is not needed, take it out of your wallet and put it in a secure location just in case it is ever needed again.
Making A Credit Payment Late
Although making a payment late may not seem like a big deal at first, the effects may be felt for a long time. A single late payment on a credit account can drop your credit score by 100 points or more if your credit score is above 700. Having late payments showing on your credit history may also reduce your ability to access additional credit in the future. Be sure to make all of your credit account payments on time and try to pay more than the minimum each time you make a payment to keep your account in good standing.