Your credit score is important. It can play a significant role in qualifying for home or student loans, determining how much you pay for car insurance and landing that great apartment you really want. Here are some situations that hurt your credit score and jeopardize your financial future.
• Paying bills late. If you do not pay your bill on time, a few unfortunate consequences can occur. You could accrue interest and end up paying more in the long run, building unmanageable debt and damaging your reputation as a reliable person for a loan. Bottom line: don’t spend more money on your credit card than you can afford.
• High Debt. Think about it this way: would you loan someone $100 if they already owed five other people $100? Probably not. Unpaid debt doesn’t reflect good spending habits, thus lowering your credit score.
• Owning too many credit cards. The more credit cards you have, the more difficult it might be to keep track of how much you’re spending. Credit cards can help you build good credit – if used wisely. But don’t bog yourself down with too many of them.
• Closing old credit card accounts. It sounds logical to close credit card accounts you are no longer using. But be careful – doing so can shorten your credit history and lower your credit utilization ratio (total used credit vs. total available credit).