Common Credit Mistakes

Credit mistakes spoil our credit score, a vital three digit number which reflects our credit worthiness and help us to qualify for different types of financial services which the financial companies and banks provide us. 

Financial companies extend to us the credit facilities in the form of loans, overdraft, credit cards and many more. For this they charge us a fee and an amount in the form of interest rates. It is up to us to keep up with the deadlines and pay them the amount on time. We score negative if we fail to do so. We fail because we perform certain mistakes. These are some of the most common mistakes which we generally overlook and never pay attention. 

In order to maintain a good credit score it is important for us to avoid such mistakes and maintain a good reputation with our creditors. 

Here I will discuss the most common credit mistakes so that you can avoid them and prevent your credit score from getting spoilt. 

Let's hold multiple credit cards 

Holding too many credit cards means that you have an access to too much of credit.  This will appear as such on your credit report and this will in turn reduce your credibility with the creditors who will shy away from lending you any more amounts. 

Credit cards increase your purchasing power. More you use them, more amounts you have to pay and in case you are not able to keep the deadline, interest rates build up and you are left with large bills which you have to clear off at the end of the month. Credit cards get you into debt and with too many credit cards in your wallet you have to exercise a lot of patience, willpower and discipline so that you don't end up with piles of debt. 

Let's pay only the minimum dues 

This is the most common mistake which we all make. Paying a minimum amount is only is fruitful if you hold too much of debt and you have plans to pay off the credit card balance with maximum interest rate. But if you are simply not in a habit to pay the amount in full then the effect for you can be devastating. Postponing payments will increase your interest and your debt amount. Moreover this will also earn negative marks for your credit score. Remember that you still have to pay the amount to the company. You cannot shy away. 

No harm in exceeding credit limits 

Once you exceed your credit limit you are liable to pay additional fee and interest for the extended limit. 

Credit report is alright. No need to check it. 

Errors in credit score are not uncommon. Therefore it is wise to cross check your credit report every time you receive it. Your credit report is your responsibility and therefore it is your duty to examine it carefully and get it corrected.