Let’s be honest—credit scores can feel like this big, mysterious number that dictates a lot about your life. It impacts whether you can rent an apartment, buy a car, or even land that dream job. And while you probably know the basics, like paying your bills on time, there are sneaky habits that could quietly be dragging your score down. Yep, even the ones you think are harmless!
But don’t worry—we’re here to unpack those hidden habits and help you fix them. Ready to take control of your credit score? Let’s dive in.
You Never Check Your Credit Report
When was the last time you checked your credit report? If you can’t remember, don’t sweat it—you’re not alone. Most people skip this step, assuming everything is fine. But mistakes happen, and sometimes incorrect info (like accounts you didn’t open) can pop up on your report. If left unchecked, these errors can tank your score.
You Pay Bills Late
We get it—life gets busy, and sometimes bills slip through the cracks. But even one late payment can hurt your score. In fact, payment history makes up a whopping 35% of your credit score.
What can you do? Set up automatic payments or reminders on your phone. Even better, try paying your bills a few days early. Your future self will thank you.
You Max Out Your Credit Cards
Ever heard of credit utilization? It’s a fancy way of saying how much of your available credit you’re using. Maxing out your cards, or even getting close, signals to lenders that you might be a financial risk.
Keep your utilization below 30%. For example, if you have a $10,000 limit, aim to keep your balance under $3,000. And if you can pay it off in full each month, even better!
You Close Old Credit Cards
Got an old credit card you don’t use anymore? You might think closing it is a smart move, but it can actually shorten your credit history. Lenders like to see a long history of responsible credit use—it shows stability.
Instead of closing the account, keep it open with a zero balance. Maybe use it once in a while for small purchases, like gas or groceries, just to keep it active.
You Apply for Too Many Credit Accounts
It’s tempting to apply for that shiny new rewards card or store credit deal, but here’s the thing: every time you apply for credit, it triggers a hard inquiry. Too many of these inquiries in a short period can make you look desperate for credit, which is a red flag to lenders. This is especially important when considering that car insurance is affected by credit score in many cases. A low credit score can potentially result in higher premiums, as insurers may view it as a sign of increased financial risk.
The solution? Be picky. Only apply for credit when you truly need it, and space out applications to avoid those dings on your report. By maintaining a healthy credit profile, you can not only improve your borrowing prospects but also keep your car insurance rates in check.
You Ignore Small Debts
That $50 medical bill you forgot about? It might not seem like a big deal, but small unpaid debts can end up in collections, which is bad news for your credit score.
Keep an eye on your bills, even the small ones. Set reminders to pay them on time, and if you’re unsure about a debt, call the provider and ask for details. It’s always better to tackle these head-on than let them fester.
You Co-Sign Loans Without Thinking Twice
Helping out a friend or family member by co-signing a loan might seem harmless, but it ties your credit to their actions. If they miss payments, your credit takes a hit too.
Before you co-sign, ask yourself: Can I afford to take over this loan if something goes wrong? If the answer is no, it’s okay to say no to co-signing. Protecting your credit is more important.
You Only Use One Type of Credit
Did you know that lenders like to see a mix of credit types? If you’re only using one kind—like just credit cards—it could limit your score’s potential.
No need to rush out and take on unnecessary debt, though. If you need to finance something (like a car or home), this can naturally add diversity to your credit profile. Over time, a balanced mix of credit cards, loans, and other accounts can help boost your score.
You Believe Carrying a Balance Helps Your Score
Let’s bust a myth: carrying a balance doesn’t improve your credit score. Some people think leaving a small balance on their cards shows responsible use, but all it really does is rack up interest charges.
The best move? Pay off your balance in full each month. You’ll save money and keep your credit score in tip-top shape.
You Don’t Understand How Credit Scores Work
This one’s a biggie. Credit scores can feel confusing, but understanding how they’re calculated can make a world of difference. The main factors? Payment history, credit utilization, credit history length, credit mix, and new credit inquiries.
By focusing on these areas and staying informed, you can make smarter decisions for your financial health. Knowledge is power, and when it comes to credit, it’s your best tool for success.
Wrapping It Up
Let’s face it: credit scores are important. They influence so many parts of our lives, from where we live to what we drive. But the good news is that you have the power to improve yours. By addressing these 10 hidden habits, you’ll be on your way to a stronger, healthier credit score.
So, what’s your next move? Start with just one habit—maybe check your credit report or set up autopay for your bills. Small steps lead to big changes. And remember, you’ve got this!
