Don’t make these credit mistakes

The amount of money you have saved in your bank account isn't everything when it comes to your overall financial situation. Credit history is nearly just as important. 

Whether it's scrupulously finding ways on how to plan for retirement or just wanting to spring clean your finances this season, credit is where you should look. First things first, you will want to get a copy of your credit report. From current debts or loans you may have taken out in the past, this report has all your necessary financial information. And while getting a copy of this report is likely common knowledge for consumers looking to improve their credit, many people still don't do it. Even if it's simply to check for credit errors, it's essential to look at this report more than once a year. 

However, looking at your credit report, there are a number of mistakes you will want to avoid that will likely hurt your credit. Here's a list:

Cosigning on children's loans
According to a recent report from MSN, you could potentially lose anywhere from five to 20 points on your credit score by cosigning on your kid's car loan. It will also lead to a thorough check of your credit history by a lender. 

Not paying parking tickets
Not paying state fines can result in a reduced credit score. If they go to a collection agency, the impact will be even worse. As you will likely have to deal with these fees no matter what, it's important you pay them as soon as possible. Not only are parking tickets likely to increase with time, but not paying them soon enough can result in a less-than-perfect credit score. MSN noted that parking tickets could reduce a score up to 100 points. 

Having too many credit cards
While it's important to have one or two lines of credit to help bolster your score, too many can get overwhelming. You will likely have to meet a minimum monthly amount for these cards, and will therefore be forced to use them each month. So, when you have three or four, that's far too many minimums to meet every month. 

Not having a credit card
Conversely however, not having a card can adversely affect a credit score. Not having a credit card could mean you don't have enough money for an emergency. Not to mention, MSN notes it can lower a score from zero to 75 points. 

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2014-05-17T10:16:49+00:00 April 17th, 2014|Finance & Planning|Comments Off on Don’t make these credit mistakes