Improving your credit and increasing your score can make life a lot easier for you, but you must be careful not to make some common mistakes. It’s very easy for your score to go down and not as easy for you to bring it back up.
The higher your score to begin with, the less a dip in the score will hurt you, but even a small dip can make or break your rental application or request for a mortgage. You need to watch for these small missteps so that you can use your credit to your advantage.
Too Much and Too Close
You’ve probably heard about utilization affecting your score, and if you pay your bill off every month, you might think that’s not a worry for you. Yet it can be if your balance is reported to credit bureaus when the card is nearly maxed out. It doesn’t matter if you pay the entire bill each month in that case because the bureaus will see the card as maxed out, and that can drop your score. If you have to put so much on the card that you come close to the limit, make early payments to keep the balance down below 30 percent of the credit limit.
What, Me Worry?
Another mistake is avoiding your statements. If you don’t keep good track of what you put on a particular card, looking at statements might seem confusing. But what you want to look for are small but incorrect charges that could indicate that someone gained access to the card. Whatever the cause, those extra charges can bring your balance closer to the limit, and thus make your score fall.
Better on Time Than Late
Pay your bills on time. That’s one of the best ways to raise your score. If you pay bills late, you risk those being reported to the bureaus, dropping your score substantially. Each company has its own requirements for contacting bureaus, but it usually doesn’t take long for them to start reporting that you were paying things late.
Free Money
Most cards have some sort of reward attached to them be it cash back, air miles, or other discounts. Take advantage of these — they’re essentially free money. Many times that cash back can be applied to the card balance, and those air miles can be used instead of paying more money (usually by credit card) to buy a regular ticket.
Going Overboard
However, note that the credit limit on your account is not free money. You have to pay back what you charge. A bit mistake that can make your score tank is charging so much that you can’t pay the card, or at least you can’t pay the card off. That can drop your score quickly.
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