A good credit score gets you the best loan. In such a situation, people are advised to increase their credit score. Along with this, various tips are also given to increase the credit score. But little do people know that some mistakes can spoil the credit score. It can be corrected by changing some habits.
If you only look at the habits that raise your score, you overlook the actions that lead to the decline. Regularly checking your credit score can help you understand where you are making mistakes. Bad financial habits can cause financial damage not only to your credit score but also to your credit score.
less credit card usage
As with everything else, it is important to balance credit card usage. To build or maintain your credit score, one must make a habit of using your credit card regularly without reaching the maximum limit. How much credit you use in a month is very important because it gives lenders and credit bureaus information about your borrowing habits and financial responsibility.
Credit card discounting or paying only the minimum amount due
Missing out on credit card bill payments completely is a big no-no and if you find yourself in a situation where you can’t make the full payment, try paying a little more than the minimum due amount. But be careful not to make a habit of it. While doing so occasionally can have a slight negative impact, doing so regularly can lead to a big drop in your credit score.
over-borrow
Lenders often offer low interest rate tax deals and sign-up bonuses on credit cards on a promotional basis. Although it may sound tempting at the moment. But you shouldn’t take out another credit card or loan unless you need it. One of the major reasons for this is that it can imbalance your credit utilization in many ways. Relying on too much credit can be overwhelming. Taking a second new credit card can lower your credit score, while taking a third credit card can increase the debt burden.
Failed to do regular credit score checks
You may be wary of checking your credit score for fear of damaging your score. However, your score is affected only when it is checked by financial institutions. By not availing the free CIBIL score check services, you remain unaware as to why your score is low. By checking your score regularly, you can better monitor this and your credit habits.