common credit mistakes

7 common credit mistakes that can hurt your score

Credit can be tricky to understand, but it is so important to the state of your financial health. Avoiding these habits – and creating healthy credit habits – can help you build and maintain a good credit score.

There are a couple of mistakes people with bad credit make. We have compiled a list to help you learn how to manage your credit well.

Whether you are a credit newbie, a credit connoisseur, or trying to rebuild your credit, knowing these common mistakes and avoiding them can help your credit a lot. These common mistakes can not only hurt your credit score but also make it harder to improve your score over time. 

Credit is a good indicator of your personal financial health. Your credit history is important; having a good credit score will help you in the future, especially when making big purchases that require a loan. In addition, a good credit score can lead to lower interest rates, higher credit limits, and better loan terms.

common credit mistakes

Mistake 1: Not paying your bills on time

One of the biggest factors that impact your credit score is your payment history. Missing just one payment can be detrimental to your credit score. In addition, missing a monthly payment leads to interest charges, fees, and penalties on your account.

Luckily, if you are only a day or so late, it should not impact your credit report – and, if your credit card company has a grace period, you won’t rack up those fees. However, if you are consistently late or 30-days or more late, your credit will suffer. And, if you are hit with a late payment notice on your credit report, it will remain on the report for 7 years, stifling your score for the entirety of that time.

We suggest setting up automatic payments or payment reminders to avoid this. As long as you have enough money in your account to cover the bills you will be okay.

Mistake 2: Not checking your credit

Another common mistake is not monitoring your credit reports. Although these reports aren’t exactly a riveting read, looking over them will ensure they are accurate. In addition, you will be able to check for mistakes or signs of fraud. If you think there are inaccuracies on your report, we can help. Click here to learn more

You can also check your scores to monitor any progress you have made in rebuilding your credit. Reviewing your credit health can help you see areas where you are doing well and areas that are in need of improvement.

Your credit score can easily be checked online, anytime you wish to view it. In addition, many credit card account statements include an overview of your score on your bill each month. Once a year, you can obtain a free copy of your official score from each of the three credit bureaus at

Mistake 3: Closing old credit accounts

Closing old credit accounts can hurt your credit score – although its impact may be temporary. Closed accounts in good standing can remain on your report for up to 10 years, but it can cause your credit utilization rate to go up. 

In addition, it can halt the growth of your score. When you close an account, you will no longer benefit from those on-time payments that were built up over time. However, if the value of closing the account outweighs the value the card holds to you, it may be time to close the account and take the temporary hit.

Mistake 4: Taking on unnecessary credit and debts

Credit is a great resource when you need it, but it shouldn’t be used without purpose. Taking on unnecessary credit and loans for things like vacation or other purchases can put a strain on your budget.

If it will make keeping up with your bills difficult, it’s best to wait to apply. Unnecessary credit and debt can make it easy to fall behind on payments. Only apply for credit cards and loans when you really need them – do not apply for them for excess purchasing or frilly wants.

Mistake 5: Only making the minimum payment

Get in the habit of paying your credit card balances in full each month. Just paying the minimum amount will cost you more money in the long term due to interest building up over time. In addition, this practice can actually hurt your credit and lead to credit card debt.

When you do this, it increases your credit utilization ratio – the percentage of your credit you are using at one time. As this utilization builds up, it can cause significant damage to your credit.

Mistake 6: Co-signing loans

Co-signing a loan can seem like a good idea, but oftentimes it can lead to sticky situations and ruined relationships. Co-signing for a friend or relative can help them obtain a loan, but, if the borrower misses payments, it will negatively impact your score. In addition, you will be legally liable for that loan if the loan is defaulted by the primary loan holder. 

Mistake 7: Avoiding credit

Credit is confusing, but it is not scary; meaning, that you should not be avoiding credit altogether. You want to build a strong credit history, as it is a way to measure your dependability and financial health. No or little credit history can hurt your chances of obtaining a loan or can lead to higher interest rates or less-than-perfect loan terms.

With no credit history, lenders will have no gauge on the risk you present to them when you need to borrow money. Using secured credit cards and other tricks can help you build your credit.


Building your credit is a marathon, not a sprint. It can take years to build – or rebuild – your credit to get it exactly where you want it. By avoiding these practices and creating strong credit habits, you should be on your way to a better credit score and a better financial future.

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