Having good credit is essential for a number of aspects of your life, ranging from the interest rate on a car loan or credit card to background checks for employment. Poor credit can be incredibly expensive, costing you thousands of dollars in higher interest rates over the course of a home loan. Fortunately, with proper care and attention paid to your finances, it is possible to maintain a good credit rating.
Here are six factors that could damage your credit score:
1. Not paying your bills on time- Bills not paid within 30 days can be reported to the credit bureaus.
2. Utilizing all of your available credit on credit cards- It is important to not max out your credit cards without a plan to pay them off.
3. Not having a diverse mix of credit- Having different types of credit, such as car loans and revolving credit, could help improve your score.
4. Applying for too much credit- Multiple applications for credit cards in a short period of time can be a bad sign.
5. Not using credit at all- You must show that you can responsibly use and manage credit in order to maintain a good score.
6. Closing credit cards- Keeping long-term accounts open is important, as closing them removes the positive history from your report.
Good credit is especially essential when searching for a new home or home loan. Having a good credit score can make the difference between having your loan accepted and being declined. Poor credit is preventable if you pay attention to the above-mentioned criteria, so be sure to stay on top of your finances to ensure success.
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