Good credit is essential for many aspects of your life, ranging from the interest rate on a car loan or credit card to background checks for employment. Poor credit can cost you thousands of dollars in higher interest rates throughout a home loan. Fortunately, with proper care and attention paid to your ﬁnances, it is possible to maintain a good credit rating.
Here are six factors that could damage your credit score:
- Not paying your bills on time – Bills not paid within 30 days can be reported to the credit bureaus.
- Utilizing all your available credit on credit cards – It is important not to max out your credit cards without a plan to pay them off.
- Not having a diverse mix of credit – Different types of credit, such as car loans and revolving credit, could help improve your score.
- Applying for too much credit – Multiple applications for credit cards in a short period of time can be a bad sign.
- Not using credit at all – You must show that you can responsibly use and manage credit to maintain a good score.
- Closing credit cards – Keeping long-term accounts open is essential, as closing them removes the positive history from your report.
Good credit is essential when searching for a new home or loan, and having a good credit score can make the difference between accepting your loan and being declined. Poor credit is preventable if you pay attention to the criteria mentioned above, so stay on top of your ﬁnances to ensure success.