7 Common Mistakes That Can Lower Your Credit Score

Paying bills late

One of the biggest factors in determining your credit score is your past payment history. While one or two late payments on your credit cards, loans, or other important obligations over a long period of time may not significantly damage your credit record, making a habit (or mistake) of it can count against you.

Not paying the minimum amount required

I f you don’t pay at least the minimum amount due, your creditors will eventually report your account as past due, which can damage your score. Additionally, paying less than the minimum can result in late fees and additional interest charges which can add up quickly.

Keeping debt levels too high

If you “max out” or already owe a lot of money on your credit cards, potential creditors may question your ability to repay. Creditors also use this information to evaluate loan approval or interest rate charges (higher interest rates are used to compensate for higher risk).

Owning too many credit cards

While offers to sign up for credit and department store cards with free gifts or extra savings may be tempting, having access to all of that credit may be detrimental to your credit score because, even if you don’t use the cards, potential creditors may worry that you won’t be able to repay a new obligation if you decide to use all that credit. Plus, all those “inquires” into your credit report may indicate to lenders that you are having financial troubles or are on the verge of getting too deeply into debt.

Not alerting creditors if you’ve moved or changed names

If you move between apartments frequently and don’t change your address on bills, you run the risk of not receiving bills on time and suffering late payments as a result. Not notifying creditors of a name change could result in your credit report not accurately reflecting the credit you’ve worked to build.

Not periodically checking your credit report

Many people never look into their credit report until they’ve been denied for a loan or credit. 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, like a car.

Not using your full legal name in financial documents

Bank accounts, credit applications, and other documents that become part of your credit history come to be on your report through a variety of ways, many of which do not have many other identifying factors like your social security number. Using your full legal name helps to make sure that your information ends up on your report. According to a FDIC senior Consumer Affairs Specialist, it’s not uncommon for a child and parent with similar names to show up on each other’s credit report.