What Are The Things You Shouldn't Ignore When Checking Your Credit Score?

Simple things like your credit score or your credit report can make or break your finances. So if you're not protecting these aspects of your finances, you could be making some costly mistakes. Rather than rely on trial and error, make sure to read this article. It covers the most important things you shouldn't overlook in checking your credit score or credit report, advice on how to fix them, and what you should look for when selecting a credit repair service.

14 Things You Shouldn't Overlook when Checking Credit Score

1. You Make Late Payments on Your Bills

When checking your credit score always remember that payment history has a major effect on your credit score. A single late payment may reduce a credit score by 100 points or more. Borrowers, though, may be able to minimize the harm if they act quickly. While skipping a payment by a few days is unlikely to hurt your credit scores, paying bills 30 or more days late may harm your credit.

How to Prevent it:

1. Take all necessary precautions to avoid being late with payments.
2. If you are prone to forgetfulness, set reminders on your phone or computer.
3. If you overspend, tighten your belt to ensure that you have enough money to fulfil your payment.

How to resolve it:

If you paid a bill late, contact your lender to learn about its policy on late payments. Regrettably, if the lender has already reported the late payment, you will almost certainly be unable to erase it from your credit report. You'll need to ensure that all subsequent fees are paid on schedule.

2. Having too many credit cards open at the same time

Even if you pay them off regularly, even if you don't utilize all of your available credit, lenders may be concerned about what might happen if you did.

How to Prevent it:

Generally, having three to five credit cards is not an issue; if you see that your credit card amounts are rising, this is a warning flag. Restrict the amount of credit accessible at any one moment.

How to repair it:

If your ratio increases too much, try cancelling one of your more recent credit accounts to maintain a low usage ratio and a lengthy credit history.

3. You have a high credit card balance.

The amount you owe is the second-most significant element when checking your credit score after payment history. While owing money does not always result in a worse credit score, using a large proportion of available credit may.

Bear in mind that a high credit usage ratio may damage your credit score and create the impression among lenders that you are a high-risk borrower. Consumers with the highest credit ratings utilize 10% or less of their available credit.

How to Prevent it:

There is no one-size-fits-all solution to how much of your credit limit you should use; what's more essential to remember is that if you have credit card balances that surpass 50% of available credit, you're hurting your credit score.

How to repair it:

Begin by reducing your overall credit usage to less than 50%, and then continue. This is a very efficient technique way of credit repair.

4. You Request an Increased Credit Limit

Even though your credit card issuer ran a credit check when you applied for the card, it will almost certainly do it again if you request a larger credit limit. This may result in a credit inquiry, which could lower your score.

How to Prevent it:

Spend under your existing credit limit whenever feasible. In this manner, you will avoid jeopardizing your credit.

How to repair it:

This is not to say you shouldn't request a larger limit – particularly if you're a good credit user who doesn't intend to max out your card. However, it would be best if you paused before applying for a mortgage or other loan.

5. You Make an Erroneous Credit Card Purchase

It will benefit you if you practice care while making big purchases. If you use all of your available credit on one card – mainly if it is your sole card – your credit score may decrease by 50 points or more.

How to Prevent it:

Choose a card that will not be maxed out if you have a choice. Additionally, avoid applying for a retailer's credit card to get a discount if the card's limit is near the amount you're charging.

How to resolve it:

Reduce your account balance to less than 50% as quickly as feasible.

6. You Begin by Paying Off the Wrong Debt

Paying off your debts may help your credit score—the degree to which you notice an improvement is determined by the kind of debt you pay.

For example, paying off your vehicle loan will not result in a significant improvement in your credit score. Credit usage on instalment loans, such as automobile loans, is not as highly weighted in credit scoring as credit utilization on revolving credit.

How to repair it:

There is no harm in paying off debt; just missed chances. Pay off credit card debt as soon as possible.

7. You Are Not Able to Correct Credit Report Errors

After checking your credit score and you discover an error on your credit report, you must take action to correct it – and then follow up to ensure the error is corrected. Otherwise, the mistake will stay on your credit record, which may harm your credit score.

Address the credit bureau that provided the incorrect report and seek an investigation. Additionally, write a letter to the credit provider – such as a bank or credit card business – that submitted the erroneous information to the credit bureau to notify them of your dispute.

How to correct it:

Verify the correctness of the information on your credit report regularly. Credit bureaus are obliged to rectify or delete inaccuracies. Begin by notifying the lender and each of the three credit reporting agencies — Experian, Equifax, and Illion — of the payment's due date and receipt. Include all supporting documents and a description of the error for the best results.

How to Prevent it:

The present credit score system enables customers to search for similar loan types, such as car finance, in a short period without the queries being recorded as numerous applications.

How to repair it: If you handle your existing credit accounts responsibly, your credit score should improve three months after the previous enquiry.

8. You Have a History of Negative Behavior

Negative items on your credit report, such as collection accounts and late payments, usually stay there for the period of seven years from the date of the first delinquency.

How to circumvent it:

Paying your payments on time and maintaining low credit card balances can assist you in maintaining a good credit history.

9. You Possess Court Judgments

Judgments are public records that appear on your credit report and may affect your total credit score. Regrettably, these debts may be difficult to settle.

How to Prevent it:

Naturally, the most accessible approach to avoid court judgements is to make timely payments on your invoices. If the debt was resolved years ago but remains on your credit report, try contacting the court to ensure that the records have been updated.

How to resolve it:

Generally, customers must take their claims to an appeals court to reverse verdicts. For seven years from the day the judgment was issued, reviews may stay on your credit reports. Even paying a review will not erase it. The only legal method to have an assessment vacated is for it to be removed.

10. You Are Late With Your Rent Payments

While paying your rent on time will not improve your credit score, paying it late will. If your landlord becomes enraged by your late payments, they have the right to report you to credit agencies.

How to Prevent it:

Certain landlords permit tenants to pay half of their rent on the first and the rest on the fifteenth of the month. This kind of arrangement may assist you in avoiding a high cost at the beginning of the month.

How to repair it:

To break the harmful habit of paying rent late, request a modification on the due date from your landlord. Selecting a date closer to payday may make meeting your commitments simpler. If the building owner refuses to cooperate, seek more inexpensive accommodation, get a roommate, or you may take up a second job to supplement your income.

11. You Are Not Compliant With Your Taxes

If you do not make timely tax payments, the problem is not limited to you and the government. When you owe past taxes, the government has the authority to put a tax lien on your property, lowering your credit score.

To prevent a credit knock and costly penalties, submit your taxes on time each year. If you are unable to pay in full, arrange for a monthly payment plan.

How to repair it:

If the tax deadline approaches and you have not yet submitted your tax returns, consider requesting an extension. Additionally, you may engage with a tax expert to settle past taxes before they affect your credit score.

12. You Are Unable To Establish Your Credit Following Marriage

Consumers often overlook how their spouse's credit conduct may impact their credit ratings. After marriage, individuals retain separate credit records. If you and your partner, on the other hand, have one or more joint accounts, any delinquencies will very certainly affect both of you. Additionally, couples often make the error of placing an undue emphasis on one partner's excellent credit score.

How to Prevent it:

If one partner has superior credit, the other may be tempted to let that person assume full responsibility for the debt. Borrowing money in just one partner's name, on the other hand, may leave the other spouse with a shaky credit history, limiting their ability to obtain loans after a death or divorce. As a result, both couples must take on some debt.

How to repair it:

If your credit history is spotty, try opening a credit card or obtaining a loan in your name and making on-time payments. Additionally, newlywed couples who change their last names should check their credit reports to ensure that all information is transmitted correctly.

13. You Believe That a Divorce Order Will Eliminate Your Debt

You and your ex-spouse may agree that they are responsible for paying down joint account balances in your divorce settlement. However, if your name remains on the account and it is not paid, your credit score may suffer throughout the divorce process. In terms of credit, the divorce judgment has no effect.

How to Prevent it:

• Pull your credit report throughout the divorce process.
• Highlight any joint credit accounts, and, if feasible.
• Remove your name from those that your husband has promised to pay.

How to resolve it:

Continue to monitor joint accounts to ensure that your ex pays payments on schedule.

14. You Initiate Bankruptcy Proceedings

If you declare bankruptcy, your credit score will decrease substantially — by 100 points or more, according to myFICO.

If you decide to declare bankruptcy, you should verify your credit report to ensure that the accounts involved in the bankruptcy have a zero balance. Keep note of the date you filed, so you'll know when the default will be removed from your record.

How to Prevent it:

If you cannot make your monthly debt payments, contact your creditors to see if a payment plan with reduced instalments is possible. This may assist you to avoid altogether skipping payments and thus damaging your credit score.

How to repair it:

After bankruptcy, you must begin reestablishing a credit history, and avoiding credit may backfire.

You can also read: Can Fixing Your Credit Improve Your Finances?

Protect your Credit Report Now

It is easy to fall into a cycle of spending, then falling behind on bills and having your credit card limit rise. You have read some steps you can take to protect your credit and keep track of payments when checking your credit score, as well as advice on avoiding the most common mistakes made by people who have abused their credit cards.

In addition, the best way to protect your credit from disaster is to make sure you hire an experienced credit repair company. Credit repair companies can help identify and repair credit problems that threaten your financial security. They can also help restore your damaged credit profile by sending you information about available new credit that might improve your score. Credit card companies are not all running equal, and not all repair companies are reputable either.

Australian Credit Lawyer is the best place to start. We can help you fix credit report problems to get back on track and build good credit scores that will help you get new business or access new opportunities. Our lawyers work for you every day to understand your rights and obligations, fix faulty debt programs, advise on how best to manage change in your financial circumstances and advise on legal matters that may arise in your financial relationships.

Apply for your FREE CREDIT ASSESSMENTnow!