Nobody wants to be thought of as just a number, and of course, you are so much more. However, your credit score goes a long way to unlocking financial benefits such as the best rates for loans and credit cards.

 

Unfortunately, if you’re not careful, you could hurt your credit score without realizing it. While it might not impact your day-to-day life, when you want to buy your dream car or need a mortgage, you’ll understand how important your credit score is.

7 Mistakes That Can Hurt Your Credit Score

We are creatures of habit, but not all of our habits are good for us. Here are some bad practices you may be doing that will wreck your credit rating.

  1. Maxing out your credit cards. If your credit balances are always sitting at the higher end, you could find your credit score dropping quickly. When calculating your score, how much you owe in relation to your credit limit plays a big role.
  2. Failing to check your credit rating regularly. You should look over your credit report at least once every year. One major reason is to avoid identity theft. Unless you are checking over your report, someone else could be opening up accounts under your name. The reality is that this will hurt your credit rating, not theirs.
  3. Avoiding credit. Credit is not the same as debt. If you’ve been offered a line of credit or an additional credit card but declined, you may have negatively impacted your credit score without realizing it. Lenders like to see a healthy credit history behind you. You can build a good history without going into debt by paying off your balances each month. This will boost your score.
  4. Late payments. Even just one late payment will show up on your credit rating. Your payment history plays a big part in calculating your credit score. Do your best to pay your bills on time.
  5. Too many credit cards. You want to have a credit history, but that doesn’t mean you need to have a dozen cards in your name. If you make a lot of credit card applications in a short amount of time, it will be detrimental to your credit rating.
  6. Co-signing a loan. This is the kind of favour you never want to do. Co-signing a loan makes you responsible for paying it back. If there is a missed payment or late payment, this will hurt your credit score.
  7. Closing your accounts. It can make sense to close a credit account that you no longer use. However, it can damage your credit history. It also reduces your credit limit and could increase your credit utilization ratio, which is a calculation of how much credit you’re using compared to how much you have. Lenders like to see that you have a lot of credit, but are using very little.

If you are interested in learning more about credit scores and mortgage solutions in Ontario, call Northwood Mortgage™ at 888-492-3690 or contact us here.