Financial Habits That Ruin Your Credit Score


A credit score is a number that represents an individual’s creditworthiness. This will either make or break your financial history, which can affect your profile to different card providers and lenders.

Avoid these financial habits that negatively affect your credit profile.

Making late payments

If you make late payments of more than 30 days, this will reflect on your financial record and may cause you late payment fee.

To ensure that you won’t be making any late payments, set a budget schedule for every payment you need to make so you will be up-to-date with future payments.

Missing a due date

Just like in making late payments, missing your due date can negatively affect your credit score.

However, you can recover from paying it off immediately. Pay beyond the minimum required amount so you won’t accumulate debt and make sure to never miss again since it will reflect on your financial record.

Maxing out your credit limit

Your credit card comes with a credit limit-the maximum amount that you can borrow without getting a penalty. Some card providers charge cardholders fees when they max out their credit limit. Additionally, they can decrease your credit limit or worse, close your account if you frequently maxing out your balance.

So, it is necessary to check your available credit or credit limit before purchasing to avoid going beyond your credit and accumulate charges.

Furthermore, lending companies can increase your interest rate if they see in your financial history that you habitually exceed in your credit card limit.

Applying for credit cards that you do not need

Surely, low-interest rate and no annual fees are inviting. This will lure you to sign up right away. If you do have already enough cards, don’t be tempted to get a new one just because they have tons of promos and perks.

Handling several credit cards at the same time is crucial, especially if you are going beyond your credit limit. One to three cards are enough to get by.

Furthermore, make sure that you really need the credit card you have been eyeing for before signing up.

Buying things you can’t afford

One of the worst habits when it comes to credit card is to buy expensive items using your card that you can’t really afford when you buy it using cash. This habit will lead you to debt, and eventually will ruin your credit profile.

Before you swipe your card, assess if you can really afford to buy it or if you really need the item. If you can’t, resist the urge in purchasing it.

Handling multiple loan accounts

Getting loan is helpful when you really need huge money. However, having several loan accounts at a time may affect your credit profile. Make sure that you are done paying with one loan before applying for another one. If you really can’t avoid, make sure that you are paying all your amortization on time.

Key Takeaway

Credit score is an essential part of your financial record. This number dictates how responsible you are when it comes to managing your finances. Make sure to avoid these poor financial habits to have a better credit score and financial record.

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