Sometimes bad credit is caused by circumstances that are beyond your control. Other times, bad credit is a consequence of your own recklessness and poor spending decisions. If the second situation applies to you, you have to change those bad habits so they won't come back to haunt you after you've repaired your credit!
Bad Habit: Paying Accounts Late
From now on, you must pay all of your accounts on time every month, even accounts that aren't listed on your credit report. Payment history has the biggest impact on your credit score and late payments cause a lot of damage. It's important that you pay everyone you owe because some businesses have the ability to put delinquent accounts on your credit report even when they don't add anything to your positive payments.
Bad Habit: Maxing Out Your Credit Cards
Your credit card balances have the second biggest impact on your credit score. The credit scoring calculation compares your credit card balances to your credit limit. If you're using a lot of your available credit, your credit score is penalized. Once you've repaired your credit, no more charging up your credit cards, even if you plan to pay the balance later. Keep your purchases below 30% of your credit limit for your credit score to improve.
Bad Habit: Applying for Lots of Credit Cards
Keep your credit card applications to a minimum. Part of your credit score – a smaller part than the other factors – is based on the number of inquiries that are made. Each time you apply for a credit card, a new inquiry is made and put into your credit history. Inquiries affect our credit score whether you're approved for the credit card or not. Opening new accounts affects your credit, too, because your credit score consider the average age of all your accounts. New accounts lower that average age and can lower your credit score.
Bad Habit: Closing Accounts
It's very rare that closing an account will help your credit score, no matter how bad the credit card terms may be. Your credit card issuers may close some accounts during the credit repair process, especially if you settle the account or ask for a pay for delete, but you don't have much control over that. Don't voluntarily close accounts, especially those that still have a balance or an account with a great credit limit.
Bad Habit: Letting Someone Else Use Your Credit
When you let someone else borrow your credit, you risk having them do damage to the score you've worked so hard to rebuild. Not only should you avoid loaning your credit card to friends or family members, you should also avoid co-signing for them, applying for joint credit cards, or adding them as authorized users on your accounts. Exceptions are sometimes made, of course, for spouses who share finances.
Remember that co-signing for a spouse is still risky. If you ever divorce, both your names will remain on the credit card or loan until it's repaid. Late payments will hurt both signers credit history even if the court ordered one spouse to make the payments.
Bad Habit: Paying Accounts Late
From now on, you must pay all of your accounts on time every month, even accounts that aren't listed on your credit report. Payment history has the biggest impact on your credit score and late payments cause a lot of damage. It's important that you pay everyone you owe because some businesses have the ability to put delinquent accounts on your credit report even when they don't add anything to your positive payments.
Bad Habit: Maxing Out Your Credit Cards
Your credit card balances have the second biggest impact on your credit score. The credit scoring calculation compares your credit card balances to your credit limit. If you're using a lot of your available credit, your credit score is penalized. Once you've repaired your credit, no more charging up your credit cards, even if you plan to pay the balance later. Keep your purchases below 30% of your credit limit for your credit score to improve.
Bad Habit: Applying for Lots of Credit Cards
Keep your credit card applications to a minimum. Part of your credit score – a smaller part than the other factors – is based on the number of inquiries that are made. Each time you apply for a credit card, a new inquiry is made and put into your credit history. Inquiries affect our credit score whether you're approved for the credit card or not. Opening new accounts affects your credit, too, because your credit score consider the average age of all your accounts. New accounts lower that average age and can lower your credit score.
Bad Habit: Closing Accounts
It's very rare that closing an account will help your credit score, no matter how bad the credit card terms may be. Your credit card issuers may close some accounts during the credit repair process, especially if you settle the account or ask for a pay for delete, but you don't have much control over that. Don't voluntarily close accounts, especially those that still have a balance or an account with a great credit limit.
Bad Habit: Letting Someone Else Use Your Credit
When you let someone else borrow your credit, you risk having them do damage to the score you've worked so hard to rebuild. Not only should you avoid loaning your credit card to friends or family members, you should also avoid co-signing for them, applying for joint credit cards, or adding them as authorized users on your accounts. Exceptions are sometimes made, of course, for spouses who share finances.
Remember that co-signing for a spouse is still risky. If you ever divorce, both your names will remain on the credit card or loan until it's repaid. Late payments will hurt both signers credit history even if the court ordered one spouse to make the payments.