Here the 8 Mistakes that can lead to a low credit score :
1 – Racking up credit card debt too early in life
More people between the ages of 20 to 24 declare bankruptcy than graduate from college, a fact that has a lot to do with credit card debt.
2 – Opening up a credit card that you can’t afford
Over 80% of graduating college seniors have credit card debt before they even have a job ! Many of them may look at credit cards as “free” money, not realizing the money they borrowed will need to be repaid.
3 – Opening up too many credit cards at once
When you apply for credit of any kind – whether it is for a credit card, a car loan or a mortgage etc… – your credit report is flagged with what is known as a “hard inquiry”.
4 – Frequently skipping loan or credit payments
If you miss a payment (even just one) on one of your credit accounts, the late payment could remain on your credit report for up to seven years. If you fall in the habit of paying late, those missed payments could quickly add up and wipe out your credit score.
5 – Ignoring past due bills, including medical bills
Collections, including medical debts, can remain on your credit report for seven years from the date of the original delinquency. Typically, doctors and hospitals don’t report debts to credit bureaus. Rather, they turn their unpaid bills over to a debt collector and it is the collection agency that reports them. It’s no surprise that debt collection can cause your credit to take a huge hit. In fact, just one collection account can cause a good credit score to drop 50 to 100 points.
6 – Allowing someone irresponsible to use your credit card
If you lend someone your card, you have a 1 in 3 chance of getting burned. It is estimated that 36 millions individuals have had negative results when allowing a third party to use their credit card. The most common problemreported was overspending, followed by not getting paid back and not having the card returned.
7 – Co-signing for someone irresponsible
According to the FTC, depending on the type of the loan, as many as 3 out of 4 primary borrowers default on their obligations, leaving the cosigner to pay. This is, after all, why they need a cosigner : they’re not good credit risks, either because they have too much debt already, or because they don’t pay their bills on time.
8 – Not protecting your sensitive information
There were 16,7 million people impacted by identity theft in 2017. That’s close to 17 MILLION people ! Someone stealing your identity could apply for multiple credit cards in your name, creating multiple hard credit inquiries. Even worse, they can rack up a lot of debt if they are approved for those cards and default on it without you even knowing about it !