Credit Record and Costly Mistakes to Avoid

Your Credit Record and Costly Mistakes to Avoid

The better your credit record, the better your chances of obtaining a low-cost loan or insurance policy, renting an apartment or qualifying for a job. Here are some common mistakes that can significantly affect your credit history and ways to avoid these pitfalls:

 Paying bills late

•  One or two late payments on your loans or other bills over a long period of time may not damage your credit record, but making a habit of this can count against you.
• Be especially careful with payments in the months before you apply for a loan, because lenders put more emphasis on your recent payment history.

Not checking on your credit report

•  Inaccurate or missing information in your credit report could raise your borrowing costs or cause delays when you’re in a rush to make a major purchase.
• You should review your credit reports at least once a year from each of the three major credit bureaus, especially before you apply for a home loan or seek some other benefit where your credit report could affect the outcome.

• Owning too many credit cards

• A stack of credit cards and department store cards — even if you rarely use them or don’t carry a balance on them — represents money that you could borrow.
  •  As a result, if you apply for a mortgage, a car loan or some other important loan, you may only qualify for a smaller loan amount or a loan with increased costs or fees.
    • Two or three general-purpose cards and a few (if any) cards issued by stores probably are enough for the average family. Consider keeping the cards you’ve had for a long time and handled well because they can show a long history of responsible credit use.

From FDC 2018 summer newsletter, 25 Years of Tips You Can Bank On.