10 Ways You're Destroying Your Credit Without Knowing It

How many times have you pulled your credit report and checked for negative marks? Maybe not a lot, because there aren't many of us who take the time to do it regularly. We're all busy. Credit problems come without the bells and whistles – no sirens or sky-falling-on-us type warnings.

Below is everything you need to know about your credit score to become aware of all the credit-related activities you engage in that could weaken or even damage your credit score and prevent you from getting approved safely for the loans and credit cards you want.

But first, let me explain the risk of damaged credit.

Bad Credit Troubles

Bad credit can cause several issues. You might not be able to borrow money at low-interest rates, or you might be charged a high rate. If you borrow at a high rate, it may become hard to ever pay off the debt. The debt that you have may have a negative impact on your ability to get a job.

If you want a job, it is possible that some employers may view having bad credit is something that indicates that you are irresponsible or that they will trust you less. Some companies may be hesitant to give you a job if they suspect that you will be late paying your bills.

The biggest issue is probably your own anxiety and stress, which are caused by having bad credit. Having poor credit makes it very difficult to achieve other goals in life and feel good about yourself.

Learn More: Bad Credit Can Cost You Money!

10 Ways You're Damaging Your Credit Without Realizing It

Mistake #1. You Don't Pay Your Bills On Time

If you believe that occasionally paying your credit card payment late is not a huge concern, you are dead wrong. Believe it or not, 35% of your FICO score is influenced by your payment history.

This implies that while a single late payment might have a significant negative impact on your credit score, numerous late payments can have an even more significant negative impact.

The most beneficial thing you can do for your credit is always to pay your payments on time, if not early. If you don't take bills seriously and pay them when the time comes, you're sure to regret it.

Mistake #2. Making an excessive number of credit applications simultaneously

While it is necessary to apply for sufficient credit, you do not want to do so all at once. When you ask for credit, such as a credit card or a loan, lenders conduct hard inquiries or requests to investigate your credit, evaluate your creditworthiness, and determine whether or not to lend to you.

If your credit inquiries significantly grow in a short time, it flags your account for probable financial difficulties, maybe prompting you to take on additional debt.

This may temporarily lower your credit score while you establish your new accounts. Bear in mind that the slump generated by a hard inquiry, or series of harsh questions, is just transitory.

Mistake # 3. You Forget To Make Payments

The most widespread mistake people make is they forget to make payments. If you allow your payment to go down even a few days, you can be in for some serious trouble. When creditors see that you've missed a payment, they will begin to charge late fees and interest on the unpaid balance.

If you're having problems paying, contact your creditors right away. Inform them of your circumstances so they know you are struggling to pay your payments and don't blame them.

In most cases, they will try to help you find a solution to your problem.

Mistake #4. You Don't Check Your Own Credit Report.

Your credit report is literally the most important financial document in your life. If you have bad credit, it can affect your ability to get a job, buy a house, rent an apartment, and get approved for many types of loans.

It's essential to know where your credit stands. But many studies show that nearly half of all consumers don't check their credit reports, even though it's free to do so and easy to set up automated notifications when there are changes to your report.

But why would people avoid reviewing their own credit? One reason is that people think they'll be upset by what they see: the late payments or debts they wish they hadn't racked up or the errors that mean they don't have as much available credit as they thought.

But that's a good reason to check your report; you should know what mistakes are on there so you can correct them and prevent further damage to your credit rating.

Mistake #5. You Let Debt Accumulate

One of the frequent reasons people have bad credit is that they don't realize how damaging it is to let debt build up. They think they can handle things themselves, or they're not quite sure why their credit is essential.

However, if you're concerned with building or maintaining a good credit rating, then you have to get a grip on your finances and do everything you can to lower your debt as much as possible.

If you are in over your head in debt, then try as hard as you can to get out from under it.

Mistake #6. You Rely On Inaccurate Credit Information

You might not realize how many problems there are with credit reports, which is why you need to check your credit report regularly. The information in your credit report could be wrong, and it very well may be hurting your chance to qualify for a loan, rent an apartment or even get a job.

If you want to know your credit score, you can get it for free from the three major credit bureaus: Experian, Equifax, and Illion, But you're not getting the whole story. Each bureau has its own score, which you can also buy for a fee. All these scores are based on information in your credit report, but they don't just add up that information in the same way.

But remember this: You should know what the actual score is because what your lender sees may be different. You'll need to check with all three bureaus to be sure you're getting an accurate picture.

Mistake #7. There Are Errors in Your Credit Report

The Fair Credit Reporting Act(FCRA) authorizes you to dispute anything in your credit report that you believe is inaccurate. But knowing how to do it is the tricky part. To discuss an error, you must know what kind of information is in your credit report and how it got there. Here are three ways that mistakes can get into your report:

1) Errors may be the result of fraud: A thief steals your identity, applies for new credit cards under your name, and racks up thousands of dollars in debt. Then, when the companies try to collect the money, they come after you.

2) Errors may be the result of clerical mistakes: When someone checks your credit report, the information in it must exactly match what's in their own records. If a clerk at one company makes a mistake while typing or copying data, that error will go into your report -- and every other company that buys or sells credit reports or provides them to lenders will have access to it.

3) Errors may be the result of errors made by collection agencies: Collection agencies often buy bad debts from original creditors at pennies on the dollar. They then try to collect whatever they can from people who owe money on those bills. 

Mistake #8. You Cosign For Someone Else's Debt Or Loan(s)

While cosigning loans is frequently essential for parents of students or pals in a jam, there is a reason for the cosign: creditors do not trust the original applicant's trustworthiness. This lack of confidence is not always due to delinquency; it might also be a result of limited credit history or income that is not many times the loan amount, for example.

Regardless of the rationale, the cosigned debt will reflect negatively on your credit record. If the other party does not pay and the account gets past due, the late payment will display on your credit report, affecting your credit history as well.

Mistake #9. You File for Bankruptcy But Still Wreck Your Credit

Once you file for bankruptcy, the credit card companies know that they're not going to get paid. So they stop sending you bills and start sending you collection notices. But that doesn't mean they'll go easy on you.

The credit card companies will try to go after all of your assets -- including your house, your car, and even your personal property.

You may feel relieved when you finally file for bankruptcy, but stop and think about how it will affect your life. Your credit score won't just stay low forever -- it will drop even further after you file for bankruptcy.

Many landlords check applicants' credit reports before deciding whether to rent them an apartment. You may have difficulty finding work if prospective employers run a credit check on you as part of the hiring process.

The best thing to do is avoid filing for bankruptcy at all costs!

Mistake #10. Paying Only the Minimum Payment on Your Balances Doesn't Help!

Making minimal credit card payments doesn't help your credit. In fact, it can hurt. Here's why:

Paying only the minimum payment means you're paying a small amount toward the total balance while interest charges continue to accumulate. This can lead to late fees and higher interest rates on future purchases.

Paying only the minimum payment also means you're stuck in debt longer, which means you'll have less money to spend elsewhere. And that can affect your credit rating again in three ways: 

1. Your balances keep growing, which can lower your credit score.

2. Your available credit keeps shrinking, which can lower your score again.

3. You may be more likely to stop paying your bills altogether, which will hurt your score even more and possibly result in collections activity against you. It is best to pay off your balances in full every month and keep your available credit high.

Key Takeaway

Making one or two of these mistakes may not hurt you that much. But when all ten add up, you could seriously damage your credit and financial health.

DON'T let your credit rating drop because you didn't know these common mistakes.

You have the power to take action to protect your credit. No one should have to spend their life suffering the financial consequences of poor credit management. You should always talk to an experienced credit repair agency like Australian Credit Solutions.

They will be able to assess your situation and guide you through the process of repairing your credit. They can also advise on how to avoid damaging your credit further in the future.

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