Your credit report and overall score form the foundation of your financial status. The stronger your foundation is, the more likely you are to be seen as a viable debtor to potential lenders. Your credit score will serve as an indication of your overall risk factor if extended a loan, mortgage, credit card, or any other form of credit based accounts by a potential lender.
Building your credit score takes time and consistency, most individuals who have a low credit score would have committed one of the following top egregious credit blunders to get it there.
Top 4 Egregious Credit Blunders
- Missing a payment - This is one of the most common credit problems and can have a major impact on your credit score. Late payments can stay on your credit report for up to seven years, so it's important to make sure you're always paying your bills on time, it's important to make your payments on time because they will remain on your report for up to 7 years from the date of delinquency (the missed payment), even if you pay the past-due balance.
- Maxing Out Your Credit Card - Another bad habit that can damage your credit score is using too much of your credit limit. This makes you appear as a high-risk borrower and can lead to higher interest rates
- Don’t review credit reports – If you don’t make it a practice to review your credit report it is very likely that the errors that do exist will continue to damage your credit score. Your credit report should be reviewed at least once every quarter to ensure all the information is correct and free of any surprises.
- Too many credit lines open at once - When you apply for multiple credit cards at the same time, it can have a negative impact on your credit score. This is because each time you apply for a credit card, the lender will do a hard credit inquiry, which can temporarily lower your score.
How To Dodge The Credit Blunders
A credit score is like a report card for your financial health. A good credit score means you're a responsible borrower who lenders can trust. Here are some tips for maintaining a healthy credit score:
- Make all your payments on time. This includes credit cards, loans, and other bills. late payments can ding your credit score.
- Try not to cancel a credit card unless you absolutely have to. Instead, ask the bank if they'd be able to downgrade your card to a free card instead. This won't count against you and will keep your credit history intact.
- Check your credit report regularly. This way you can catch any errors or fraudulent activity early. You're entitled to one free credit report per year from each of the three major credit bureaus.
- Don't open too many credit cards at once. Too many credit inquiries can lower your credit score. only open new credit cards when you really need them.
Following these tips will help you keep a healthy credit score and reputation with lenders.
Standard Benefits Of A Good Credit Score:
- Easier to get a loan for a car or home,
- Higher credit limit, which means you can borrow more money, and
- Better interest rates on loans.
Emotional Benefits:
- Pride in being responsible with your finances, and
- Sense of security in knowing you're prepared for unexpected expenses.
The three credit bureaus are TransUnion, Experian, and Equifax. Each credit bureau has a slightly different credit score calculation, so your credit score may vary depending on which bureau lenders use.
The credit bureau that is most strict in their credit score calculations is Equifax. They are the credit bureau that takes late payments the most seriously and dings your credit score the most for them.
The most lenient bureau in their credit score calculations is Experian. They are the credit bureau that takes late payments less seriously and dings your credit score less for them.
Bottom Line
Your credit score journey will require discipline, focus and determination. No matter the severity of your credit score, it can always be rebuilt over time. The only way to build your credit is to ensure it is clear of egregious errors that would otherwise continue to impede on your progress. Call Credit Sage today and have our experts help you dispute any errors on your credit report.
Once your credit report is free of all errors your journey to credit perfection will begin. This is where you will need to focus and avoid performing an egregious credit blunder that could very well set you back.
