The credit card score is an important measure of your financial health and well-being. It determines how much interest you will have to pay and other related fees over the course of your credit life.
A good credit card score comes with its own perks. To mention a few, it helps you get better insurance rates, secure hefty loans, lower credit card interests, and attain higher credit limits.
Despite all the misconceptions, you do have some control over your credit card score. There are some mistakes that most people make that lead to a bad credit score. Making these mistakes lowers your score and that leads to various financial issues down the line.
Here are some mistakes that you need to avoid if you want your credit card score to be high
Maxing Out Each Month
Most credit card owners don’t know that the amount they owe in relation to your credit card limit makes up about 30% of your FICO score. It is always a good idea to keep your credit below 25% to 30% of the limit to be on the safe side. If you have a destiny credit card, you can do the destiny credit card login to keep track of your spending.
Your credit score usually takes a hit when you maintain your balance higher than the credit card limit. Thus, maxing out each month leads to more interest which is bad for the credit score.
Not Monitoring Your Credit Score
Most people ignore this simple and straightforward thing which costs them a lot down the line. You need to check your credit reports, history, and score on a regular basis and consult with an expert if you find that your score is decreasing consistently.
You need to learn about ways you can use this information to improve your credit card usage and score. Checking can help you identify that there is a problem and that you need to fix it at once to avoid issues in the future.
Making Too Many Credit Pulls
Credit pull is basically the process of your account being checked by possible lenders or the people you want to do business with. A credit pull usually happens when you apply for a mortgage, loan, or a new credit card.
In this process, your credit worthiness is assessed by a lender who looks at your history and past score. One way to avoid this is by going for one application activity at a time.
What this means is that you can take a loan for a car or your house but not at the same time for both these things. This helps you maintain a good credit score without risking anything.
Co-Signing a Loan
Some people make the mistake of co-signing a loan with someone without looking at their credit history and score. But since your name is added to the loan agreement along with the primary applicant’s name, any misconduct by that applicant leads to a decrease in your credit score as well.
Cosigning makes you equally responsible for that loan and though it can help your loved one get approval and lower interest for the loan, it will also lead to a bad credit score if they don’t pay back every penny on time.
Having Only One Type of Credit
Some people use their cards for only a single type of credit payment. They go for either revolving or installment credit which is bad for the overall score. By using a mix of these two types of credits you will soon be able to increase your credit score. Also, credit cards such as Destiny offer the Destiny Mastercard Login that you can use to learn about its features.
You can go for monthly and weekly payments (installments) as well as minimum payments you need to pay in a fixed time (revolving credit), to be able to stop your credit score from decreasing rapidly.
Not Paying Bills Timely
Your payment history is among the most important factors that determine your FICO score. It makes an impact of about 35% on the score which means not paying your bills on time can permanently decrease your score in very little time.
Not paying bills on time and leaving them for when you are most comfortable is never a wise thing to do. This shows that you are an irresponsible individual who cannot be trusted with loans or other essential financial transactions.
So, these are some of the main mistakes that most credit card owners make that harm their credit score. Most people find these mistakes trivial, and they ignore these blatantly not knowing that these can render your credit card useless if you don’t stop with this behavior.
We really hope you have learned something of value from this information and we urge you once again to not make these mistakes like so many other credit card users if you want to make the most out of your credit card.