7d ago in General discussion
10 Costly Mistakes to Avoid When Building Credit
1. Don’t Miss Payments
Late or missed payments can severely damage your credit score. Always pay at least the minimum due on time.
2. Don’t Max Out Your Credit Cards
High credit utilization (over 30% of your limit) can hurt your score. Aim to keep balances low.
3. Don’t Apply for Too Much Credit at Once
Multiple hard inquiries in a short period can signal risk to lenders and lower your score.
4. Don’t Close Old Credit Accounts
Length of credit history is important. Keep older accounts open, even if you don’t use them often.
5. Don’t Ignore Your Credit Report
Errors or fraudulent activity can go unnoticed. Regularly check your report to ensure accuracy.
6. Don’t Spend Beyond Your Means
Overspending leads to high balances and difficulty paying off debt, which can negatively impact your score.
7. Don’t Co-Sign Without Careful Consideration
Co-signing makes you responsible for someone else’s debt, which could harm your credit if they default.
8. Don’t Close a Card to “Fix” Credit Utilization
Closing a card reduces your available credit, which can increase your utilization rate and lower your score.
9. Don’t Use Payday Loans or Predatory Lending
These high-interest loans can trap you in debt and don’t typically help build credit.
10. Don’t Forget to Diversify Credit Types
Having a mix of credit (like credit cards and installment loans) can strengthen your credit profile.
Avoiding these common mistakes will help you build and maintain a strong credit foundation!
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10 Costly Mistakes to Avoid When Building Credit
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