5 Common mistakes that lower your credit score

Maintaining good credit can be a real challenge if you do not understand what you are doing. There are countless formulas that go into making up your credit score that determine whether your credit score goes up, goes down or stays the same.

The first step to preventing yourself from lowering your credit score is to first understand the basics of credit reporting. After you have a basic understanding of how credit reporting works then you will know what you need to do to build and establish your credit.

#1 Refusing to pay a bill for products or services you agreed to pay.
There may be times when you feel you were cheated or are not happy with the products or services you agreed to pay for. In this instance refusing to pay your bill or debt is not the right answer to resolving your problem. By refusing to pay your bill may or may not hurt the company you owe but you will definitely hurt yourself because refusing to pay a bill will negatively affect and lower your credit score. If you are unhappy with your purchase then there are other appropriate actions you should take but outright refusing to pay is definitely not the answer.

#2 Applying for too many credit cards.
Another common mistake people make is believing that applying for a bunch of credit cards is a good for your credit. The truth is having, using and maintaining credit cards is good for your credit but going overboard and applying for a bunch of credit cards will lower your credit score.
Each and every time you apply for a different credit card, you are granting that credit card company permission to pull up and review your credit history. This is also known as a hard inquiry. And each and every inquiry lowers your credit score anywhere from 5 to 20 points depending on many different formulas.

#3 Forgetting to pay your credit card or other debits, loans, etc on time.
Anybody can be late paying a bill on time once in a while. After all we are humans and humans make mistakes. If you forget to pay a bill on time and this can be anything from a credit card, student loans, car payment, and mortgage or any other bill including but not limited to call phone and utility bills. If you are late be responsible and pick up the phone and call your debtor and apologize for being late and politely explain why you are late in paying your bill. Usually and I use this term loosely, if you are no more than a few days late you will likely not be reported to the credit bureaus for being late making a payment provided you pay your bill. If you outright neglect to pay your bill or bills then usually after 30 days the debtor will report you to the credit bureaus for not paying your bills on time and this will lower your credit score. The best policy for paying bills is to pay them early rather than waiting until the last minute to pay your bills.

#4 Racking up unpaid parking tickets, traffic violation tickets or even unpaid library fines.
As silly as it may sound a simple unpaid library late fee, parking ticket or a traffic violation ticket will lower your credit score. The fact remains all of these debits are reported to collection agencies and the credit bureaus and when this happens your credit score will be negatively affected. If you owe the library money or have a ticket to pay, then do the right thing and pay up. While you can dispute a parking ticket or a traffic citation in court, outright ignoring these things will lower your credit score.

#5 Not using your credit.
Not using your credit will lower your credit score and will ultimately harm you.
Some people live by the rule that if they don’t have cash then they will not make a purchase.
While this may seem responsible it does no good for your credit because credit bureaus like to see that you can use your credit and use it responsibly verses not using it at all.

In addition to the above statements. If a collection account shows up on your credit report, it could sit there for up to seven years and sometimes longer depending on your specific circumstances. Even if you pay your late bill after the fact is was reported to the credit bureaus it can and will likely lower your credit score by 100 points or more.

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