Having bad credit can be a huge disadvantage not only when applying for a new credit card or a new loan, but also when it comes to applying for a job or employment. What bad habits should you avoid to keep your credit score in great shape? Consider these tips:
- Not following a monthly spending plan. Do you have a written budget plan that you follow each month? Without a budget plan, you will not be able to keep track of your spending. Creating a plan that suits your situation will enable you to manage your finances more and stretch your budget more effectively.
- Not living within your means. Are you guilty of splurging or buying expensive things even if it means borrowing against your credit? Are you often out partying with friends using only your credit cards to pay your bills? If you find yourself struggling with your credit card payments as well as your other bills, then it might be time to evaluate your situation and make the necessary changes. If the cost of your expenses is way more than what you earn each month, then don’t delay. Find practical ways to cut back on your expenses today.
- Missing your due dates. Are you often late in paying off your credit card balances? Missing your due date of payment even just for one day will cost you late fees. Furthermore, not paying off your full balance each month would also mean paying additional interest rate charges. If you want to protect your credit score, you should be prompt in submitting payments to all your creditors regardless of the type of debt you owe.
- Acquiring retail store credit cards just to get a discount. Did you apply for a retail store card just to get a 10% discount on a $500 worth of purchase? Although store cardholders can enjoy exclusive discounts, you should be careful about acquiring store cards unless you intend to use it regularly. The maintenance fees and penalty fees can prove to be a burden.
- Chasing credit card rewards. Do you own a reward credit card? If yes, using it to purchase things can be tempting but if you’re not sure whether you can pay off your full balance or not, it’s best to skip the purchase. Do not use your reward credit card just for the sake of earning points because the interest rate fees can be steep, ranging anywhere from 15% to 20%.
- Not checking your personal credit report regularly. Checking your credit report at least twice a year is your best way to protect yourself against identity theft. Identity thieves can try to open accounts in your name and it can take months before you discover that you’ve been a victim of fraud. Checking your report gives you the opportunity to correct errors in your report which can be pulling down your score. More importantly, you can detect unfamiliar charges and alert the credit bureaus immediately.