Top Ten Credit Mistakes

Credit mistakes are often made by people who lack financial knowledge. Establishing your credit and wisely managing your credit becomes a lot easier when you know how to do it. This way you'll be able to avoid bad credit. You will also feel empowered by taking knowledgeable steps towards good credit. You will also be on your way to purchase real estate and get greater freedom financially. If you plan financing real estate either as a home buyer or as an investor, you can avoid these credit mistakes. This will help you save your credit score and save money in loan costs.

1. Paying Late: Your credit score is based on a few things. It is based on your credit history. It is also based on how you manage your current and past credit obligations.

2. The Feel Good factor: This is one of the credit mistakes most people are emotionally inclined to make. They are called recreational shoppers. These people buy more on spur of the moment than logically. This can often lead to bankruptcy.

3. Close your credit card accounts: This is what you tend to do when you want to resist the temptation to use or abuse your credit cards. But this is a big credit mistake with the FICO scoring system as closing credit card accounts will hurt your credit scores.

4. Teaching your children responsibly: Children are very impressionable. If they see you using your credit excessively and irresponsibly, they will make the same credit mistakes.

5. Applying for many credit cards: If you apply for too many credit cards in a year, or at the same time, can be a big credit mistake as it is easily noticeable to many credit bureaus.

6. Debt Consolidation: You may hire a credit consolidation company to consolidate your credit card debt. This will not make your debt go away! In fact, this may be seen as a write off. It is advisable not to do it unless absolutely necessary.

7. Skip Payments: You can skip payments occasionally. This can happen to anyone. But, this becomes a credit mistake if you are doing it as per your convenience.

8. High Balance: This will definitely affect your credit score. Adding more and more cards is a sure path to bankruptcy. You are better off carrying one credit card and paying it in full. The best thing you can do is not to quit until it is completely paid.

9. Not using your credit card: This is a credit mistake most people make without realizing it. Your credit report reflects on your credit card management. If you have no record, it shows lack of management.

10. Making minimum payment: This is a sure sign you are not managing your card properly. This is a credit mistake which is a personal favorite of credit card companies.

If you can avoid the credit mistakes mentioned above, you should have no credit card debt and it should be all smooth sailing.